JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 12 Jan 2005

Grocery Prices: Presentations.

Chairman

We have delegations on the groceries prices issue from the Dublin Meath Growers Society Limited, TASTE Council and Combat Poverty Agency. Shall we take all three delegations together? There will be 12 to 15 minutes for each presentation, followed by the question and answer session. Is that agreed? Agreed.

I welcome Deputy Jim Glennon who is here to assist the committee in its deliberations and is deputising for Deputy Ollie Wilkinson. Deputy Hogan wishes to raise a matter before proceeding to our hearings.

Deputy Hogan

Since our last meeting we have heard the news that Superquinn has decided to sell most of its majority shareholding to Select Retail Holdings, a new company backed by a group of private Irish investors. I pay tribute to the work of Superquinn, an Irish-owned company, and in particular to the Quinn family, who have done everything possible to create a wide variety of choice in the marketplace but also competition on behalf of consumers. It was a high quality food provider for Irish consumers. After 40 years in the business the Quinn family deserves the credit of the Irish people for the great work it has done and the enormous contribution it has made to the food sector.

Since the announcement of the acquisition of Superquinn by Select Retail Holdings I am concerned that we should invite, at the earliest possible opportunity, the new owners to establish if they have the same plans and the same philosophy as the Superquinn group. I propose that the committee write to Select Retail Holdings asking it to participate in our grocery hearings in order that we can hear what expertise and plans it has to bring to bear on the grocery market in the interest of Irish consumers.

Chairman

I had a telephone call from Senator Feargal Quinn. I did not get to speak to him directly but he left a lengthy message. He wanted to assure me and the committee that the takeover had taken place and that the company would continue in Irish ownership, a wholly owned Irish company. Its commitments and bona fides, as far as I could ascertain, would remain the same. The Senator's commitments, deliberations and contributions to this committee in this investigation will also be the same.

As Chairman, I join Deputy Hogan on behalf of the committee in congratulating Senator Quinn and his family for all they have done to raise the standards of this industry to where they are today. The Senator is one of the pioneers of the industry. His membership of the Oireachtas has enhanced our overall view and has been an enormous assistance to us and the industry down through the years.

I know some of those involved in the new company. They have been captains of industry in their own fields and have made a major contribution to date in the era of the Celtic tiger one and two. I endorse what Deputy Hogan said with regard to their coming before the committee for it to receive the details at first hand. As the Minister will be in attendance for the last day of these hearings on Wednesday, 23 February 2005, I suggest we invite them to appear before the committee after the Minister's contribution on that day. Is that agreed? Agreed.

The three presentations for the committee today are from the Dublin Meath Growers Society Limited, TASTE Council and the Combat Poverty Agency. All are welcome. The first presentation will be from the Dublin Meath Growers Society Limited. I welcome Mr. Pat O'Connor, general manager, Mr. Simon Walsh, commercial manager, and Mr. John Hogan, the technical adviser. I remind visitors that while the comments of members are protected by parliamentary privilege, those of visitors are not. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person outside of the House, or an official, by name or in such a way as to make him or her identifiable.

We will follow the usual format and ask Mr. O'Connor to make the initial submission to the committee. He will have ten or 12 minutes to do so. The TASTE Council will then make its submission, followed by that of the Combat Poverty Agency. Members may then ask questions which will be taken in an orderly fashion. We have found this the easy way to conduct the business in the past. I welcome Mr. O'Connor and his organisation and invite him to make his presentation.

Mr. Pat O’Connor

I thank the committee for the invitation to appear today. As the only member-owned group currently supplying fresh produce in Ireland, we believe we have a message to get across and appreciate the opportunity to do so.

I will start by giving a brief background to the Dublin-Meath grower group. We are a member-owned group of growers based in north County Dublin. We have 26 members, predominantly in north County Dublin, the area of Fingal, Garristown and the south Meath area. We also take produce from up to 65 growers throughout the Irish season which, thankfully, runs on various different crops for almost the full 12 months.

The company was formed in 1987 and has worked its way to where it is today through the hard work of growers who invested considerable amounts of money into enhancing the Irish horticultural industry. Our primary business is with the multiples, particularly Tesco Ireland and to a lesser extent Marks & Spencer to which we supply all the core vegetables. Our primary focus is Irish grown produce. However, we have had to supplement it through import business in order to spread out the costs of the business over a 12-month period. In 1997 when we dealt with the Quinnsworth group, we had access to approximately 15 or 16 of its stores in the greater Dublin area. Following Tesco's takeover of Quinnsworth in 1997-98, the full number of stores was opened up to us by central distribution whereby we supply all stores in all parts of the Republic of Ireland with our produce.

Our turnover in 1998, in our first year with Tesco, was just over €2 million. At the time we started by supplying nine vegetable lines. I am delighted to say that in the intervening years this has grown. Our turnover up to September 2004 was just over €15 million and the current number of lines is 35 or above. This provides a brief background to the scale of the business.

The key message we need to get across on behalf of our growers is that a number of factors mitigate against the price differential about which we hear so much between us and the United Kingdom and Dutch markets. These factors centre around scale of operation and production costs. It is also important to consider the growing base in Ireland and that in other countries. We must also address the issue of the commitment we have got from Irish multiples.

I will start with our scale of operation. When one compares price, and retail businesses in particular, one must factor in the size of the market. Ireland has a population of approximately 4 million spread out over the 26 counties. The United Kingdom has a population of 55 to 60 million, large numbers of which are in fairly small dense areas. In Holland approximately 16 million people live in an area the size of Munster. Therefore there is significant cost involved for us when we just consider the factor of basic distribution channels.

Production costs here, because of our geographical location as much as scale, are significantly higher than those of the UK or the Netherlands. For example, if one buys 100,000 plants one gets a good price but if one buys only 1,000 plants the price will be different. Given that most of these inputs are imported there is a significant cost factor involved in bringing them into the country. Therefore there are higher costs across the board.

Another key factor is grower numbers. In 1980 there were approximately 1,200 growers in Ireland. In 2004, this figure is somewhere between 350 and 400. There is a key message in that for everyone in the industry that once a grower leaves the industry, he will not be back. He does not just leave for a year or two. This is a worrying trend on which we must focus. If we want to retain an Irish industry we cannot let those numbers fall any lower.

Chairman

What was the figure for 1980?

Mr. O’Connor

It was approximately 1,200 growers and it is now between 350 and 400. Those 350 to 400 growers are not big company operations. There are many small family owned units where mother, father and perhaps a son or daughter are trying to eke out a living. Within the current market that is not easy because we must compete with large scale operations in the United Kingdom and the prices and cost scales towards which they operate. If we want retail outlets of the type found in the United Kingdom, we have to accept that most of the produce sold in Irish supermarkets will be of foreign origin.

The committee is interested in the commitment of the multiples to Irish produce. I can only speak on behalf of the Dublin Meath Growers Society Limited. We are predominantly involved with Tesco, which has given us a huge level of commitment over the last five years. If our operations are to be sustainable, we need a viable and consistent market and we have to guarantee and provide quality. Market surveys have indicated in recent years that quality, freshness and value are the first things people look for when they go to shops. I am primarily interested in talking about quality and freshness. When I was growing up, I used to hear people say that one cannot beat something that is grown in one's back garden. Such a philosophy is mirrored throughout the activities of the Dublin Meath Grower Group.

Tesco gives the society a crop programme across all its lines at the start of each year. It provides what can best be described as a seasonal price, which allows the society to offer its growers a consistent market, a viable return and a price that does not fluctuate from day to day. The growers can then speak to their bankers if they wish to invest money in their businesses. There has been a significant level of investment over the last five years. Some growers have invested between €1 million and €1.5 million in refrigeration, field rigs and packing and washing equipment. The importance of such investment to product freshness cannot be under-estimated. Products which are imported into this country do not have the same taste as Irish produce because they have been grown to have a longer shelf-life. They will not offer the healthy eating option offered by Irish-grown produce.

Tesco's involvement with the Dublin Meath Growers Society Limited means that it does not chop and change its markets. The society is charged with supplying products to Tesco. I wish to emphasise that Ireland can be the victim of dumping by large foreign companies, which often put their excess produce on a boat to be sold in Ireland. Such produce can sit in Dublin for a couple of days before being bought by someone who sells it to the various outlets at a much lower cost than that incurred by Irish growers and suppliers. The imported produce often replaces the produce that Irish growers were planning to sell on the Irish market. Such growers may have to dump their produce. As they cannot bring it to the UK, they have to leave it in the field and disc it into the ground. I can categorically state that Tesco does not receive such produce because it honours the crop programmes. Tesco offers growers sustainability and market consistency and the growers offer Tesco quality produce.

Tesco has helped to promote the idea of healthy eating. As I suggested earlier when speaking about home-grown produce, there is no doubt that a tomato grown in Rush will have a much nicer taste than a tomato grown in the Canary Islands. I do not wish to down-grade tomatoes from that region, but I stress that they are grown for journeys of two or three days.

I will conclude by speaking about costs. It is likely that everybody who has appeared before the committee has listed various costs. I do not want to speak about the various figures I have cited at the back of my documentation. It is fair to say, in general, that the costs incurred by small businesses operating in the current marketplace in Ireland are 20% or 25% greater than that of their counterparts in the UK or mainland Europe.

Chairman

One person from each group is being asked to make a presentation. Members will then be allowed to ask questions. The Chairman will give those who wish to respond all the time in the world to do so. I thank Mr. O'Connor for his presentation. Mr. Peter Ward will make a presentation on behalf of the TASTE Council. I welcome his colleagues, Mr. Ross Lewis and Mr. John McKenna.

Mr. Peter Ward

Is cúis mhór áthais é dúinn a bheith i láthair inniu. Tá áthas an domhain orainn go bhfuaireamar seans chun ár moltaí agus ár dtuairimí a chur os chomhair an choiste.

I will introduce myself and outline the role of the TASTE Council. I am an independent retailer from Nenagh who has been in business for 23 years. I produce and sell speciality goods. I live by the fruit of my labour on a daily basis. Like my colleagues, I have watched as the Irish marketplace has changed for small producers and my farming customers. The country town in which I live, which was built on beef, butter and milk, is changing every day. I monitor the profile of my customers. I know who has disposable income and who does not. The same thing is happening across the board in the artisan food industry.

Many interested parties have come together to form the TASTE Council, at the behest of Bord Bia, which is the primary marketing body for Irish food. The council is a broad-based industry body that has been established to influence strategy at national level. When 15 or 20 of us used to meet socially, at various events, we used to say that we should do something to address the serious difficulties being experienced in the marketplace by people we know. The council that was established as a result is co-ordinated and facilitated by Bord Bia, which is used as a launching pad for many of its ideas, policies and strategies. I am glad that the committee has received a copy of the council's strategy. A number of members of the committee are au fait with what the council is doing. I will give a short presentation to reiterate some of the council’s key points.

I am joined by Mr. Ross Lewis, who is a member of the TASTE Council and the commissioner general of Euro-Toques Ireland, which is a chef's organisation. He is a celebrity chef and the owner of the award-winning Chapter One restaurant in Dublin. I am also joined by Mr. John McKenna, who is a well-known food commentator, author and journalist. Other members of the council, who have Irish and British marketing experience, are celebrity chefs, food producers and specialist retailers. We are working together to identify and overcome the difficulties we face in developing the artisan sector.

The TASTE Council has a couple of key objectives at today's meeting. I would like to highlight the importance and size of the artisan sector, which has contributed to the choice and value enjoyed by Irish consumers. I know that is an important issue for the committee. I wish to emphasise that there are many opportunities for growth in the sector. That the growth and expansion of the artisan food industry is being inhibited is a key issue. I hope the committee will consider a couple of key deliverables which I will mention.

The artisan and speciality foods sector comprises approximately 320 companies, which employ approximately 3,000 people throughout Ireland. The companies have a combined turnover of €430 million at factory gate prices — the committee will appreciate that the turnover is much higher when calculated at retail prices. The council is aware, as a result of Bord Bia's marketing, that there is significant potential for growth in the sale of its members' products at home and abroad. The European speciality food market is worth €33.5 billion, which is a phenomenal figure, especially when one considers the amount of commodity food exported from Ireland to Europe. Many food markets are stagnant, but the European market I have mentioned is increasing by 11% each year. The Irish speciality foods sector needs to take a greater share of that market if it is to emulate the success of the beef and butter sectors. Ireland is well known in Europe for beef and butter, but it needs to take some key steps if it is to gain renown for its speciality food sector.

I do not doubt that Ireland is a nation of rural-based primary food producers. It needs to engage in re-skilling in the aftermath of the Fischler reforms. It would not be right to give a nation of primary food producers new skills in the IT and technology sectors because that would not sit terribly well in all areas of Irish society. A certain generation of Irish people would not be particularly comfortable with that. If the existing primary food producers are to service the growing European market successfully, they need to be helped to become secondary and value-added food producers. There are some difficulties in this regard, however. Many people want to learn new skills and the narrow gap between the various skills is full of difficulties.

There are many obstacles between the producer and the marketplace and we must deal with them at national level if we are to grow the market. I will discuss some of the obstacles in a few minutes. When one considers artisan foods, one must examine their value in terms of rural sustainability and lifestyles. Many of the finest artisan foods come from the remotest areas of the country where it is not possible to carry out intensive farming or, as a result of logistics, any other form of manufacturing. The land, landscape and people in such areas may be very suited to the production of artisan foods. For the last 20 years we have marketed Ireland as having a clean, green image. A former chief executive of Bord Bia came up with the title "Ireland, the food island" which we will have with us forever. The title and its marketing involve certain national responsibilities.

In the context of tourism, we have almost reached the magic figure of 7 million visitors. They come here on the basis of the image that this is a clean, green country with soft water, pasture, grass-fed beef and pints of Guinness. We must deliver to them in villages, filling stations, pubs, supermarkets and shops. Speciality and regional foods must be readily available and presented on these people's plates. The 7 million tourists who visit this country are high-value visitors who come here for the lifestyle and not, as we all know, for the weather. We must ask what they want to eat and what we will give them. In that context, we must ask how we can make speciality foods more readily available. We require a favourable change in purchasing policy in all sectors in Ireland from hospital, school and prison canteens to multiple stores and convenience groups if we are to grow this valuable and vulnerable sector. We must explore the shortest route to market for the speciality sector to guarantee the freshness my colleague spoke about a few minutes ago and value for consumers. Farmers' markets can offer extremely good value in terms of readily available fresh, nutritional food.

There is also a need for a change in terms of the purchasing power of multiples. There are a significant number of what the TASTE Council calls "barriers to entry" and we have spent a significant amount of time exploring them through a subcommittee. Over-regulation is one of the greatest barriers to entry and it raises its head all the time. The application of regulations is inconsistent. People feel that if they were to establish small food businesses, they would be plagued with inspectors. Our regulation module is formulated on a catch-all basis. Hygiene is not the key issue. While we can deal with that, when it comes to structure there are significant costs. Procedural changes in business are something we can handle as demonstrated by the daily implementation of HASSAP. However, structural change is a key difficulty for many small businesses. I am sure my colleagues among vegetable processors, craft butchers and abattoirs are very aware of that. It is an issue we must examine.

Europe is key. We must look at the favourable approach to the regulation of artisan foods on the continent. If there were an error in the production of a Brie de meaux, God could not make them pasteurise that cheese. According to its definition, it must be unpasteurised. There is no underlying requirement to pasteurise overnight. Our European colleagues take a different approach to the application of regulations. We saw that very clearly when a number of us visited the Salón del Gusto in Turin where 180,000 people celebrated artisan foods. The mayor of Turin and the Italian Minister for Agriculture told us how much of the school budget in Piedmont was spent on the purchase of food from the region. Money was ringfenced to ensure that not a penny of it went astray. It was admirable to see how all kindergarten children were given organic vegetables. Government can do that.

Mr. Randolph Hodgson who owns the Neal's Yard dairy in London sits on our subcommittee and is one of the most important public faces of the dairy and cheese industry in England. He emphasises the different roles of the EHO in the North of Ireland and Britain to here. In the Republic, the EHO is very adversarial whereas there he or she has an advisory function. In the United Kingdom, one can call on an EHO if one has a problem to work out a site specific plan which is relevant to one's industry. Site-specific plans are not provided in this country because of regulation which prescribes that one size must fit all. We are considering the European module very closely and would love to see the implementation of industry training for EHOs whereby they would write HASSAP regulations relevant to particular industries.

My colleagues mentioned earlier the further difficulty of the policy of multiple stores on artisan foods. While some multiples in Ireland no doubt aspire to selling Irish artisan food, which is very fashionable, our members lead us to believe that they have not adopted this practice on the ground. Multiples are becoming globalised. While Ireland has one of the most efficient category management systems in Europe, it is seen as no more than the offshoot of a large European chain for some of these companies. Multiples are applying European policies into which the Irish artisan selling 2 dozen oysters or specialist mushrooms does not readily fit. While consumers might ask to see these products on the shelves, the multiple will have a particular image based on demographics as to what such consumers will buy. As a consumer, one's choice is strictly limited to what the multiple's buyer decides one will buy in a particular shop. This is a relative factor which must be examined at national level. The 15 to 20 key buyers from multiples, convenience and forecourt shops holds the artisan food industry in the palms of their hands which they can open or close as they decide. Government must examine the issue and produce a national policy.

Poor education is a key barrier to entry according to the TASTE Council. It is terribly important to educate a generation of children to respect and know where their food comes from. All over Ireland, I question the school canteen brief to buy cheap food. Does the cheap food in school canteens support the livelihoods of agricultural parents? The chances are it does not. We would like to see a policy like that in Piedmont whereby good regional and local food is made available through school canteens for children. There should be aggressive campaigns and policies to introduce food and food education as a key element of the curriculum. I have often visited fine universities in which something very different is taught in food science faculties than is practised in canteens. To establish some linkage would be very beneficial for us.

Fragmentation is another key issue. Does a farmer in west Cork who has sold his cows, has a little cash and wants to become a food artisan contact the county development board, Shannon Development, the LEADER programme or the county enterprise board? Who runs the module which tells one how to establish a business, access funding and become an entrepreneur overnight? This must be examined as a matter of urgency. Some module could be put in place through agricultural colleges or adult education.

Chairman

Is there no one that Mr. Ward can ring at the moment?

Mr. Ward

No one whatsoever. We met the 2015 agricultural committee and got a number of our key points stitched into its report. That is a fantastic policy for agriculture but we need the same thing in education, enterprise and right across the board. Ideally, we would like an interdepartmental committee to be set up with which the TASTE Council could liaise a couple of times a year to find out what its policy is and feed our information on the industry into that policy. In that way we would see our policies appearing not just in the 2015 report but also right across the board.

If the Government has the will it can protect town centres, speciality retailers and farmers' markets as a key introductory point for specialist food sellers on a small scale before the industry can grow to a point where it can talk to the multiples or to Fortnum and Mason. The Government needs to implement key policies to protect these retailers and their opportunities for sale. The shortest and quickest route to the market needs to be guaranteed for the producer to meet the consumer. I have said enough. Committee members have listened attentively to my points.

Arís a chairde táim buíoch díbh don chuireadh inniu. My two colleagues would be delighted to answer any questions that may arise. I thank the Chairman and committee for their time.

Chairman

I thank Mr. Ward. I should have introduced the members of his delegation in the same way as I did every other group. I did not do so as I wanted to move on quickly to hear the presentation. They are representative of an industry and, as we have said to many other groups that have come before us, we are the conduit of these industries to Government. We extend the hand of friendship to all groups and we will assist them in whatever they want the Government to do, as we have done with the insurance inquiry, following which we got four Bills implemented in 12 months. That had never been done before. We want to assist other professional organisations as they are the people on the ground and know what is going on. We like to think such groups have a friend in court in this committee. We will ensure the Government listens and puts in place the requests which both sides agree are urgently needed.

This is the first interim report of the committee on this industry and there will be two more, one each year, before the end of the lifetime of the Government. In the first year we listen attentively. We may be more aggressive in the second year but what the group has said makes a great deal of sense.

I welcome the Combat Poverty Agency. Mr. Jim Walsh, its chairman, is the agency's representative here today. Ms Audrey Deane is from the Society of St. Vincent de Paul organisation and Mr. Jack Dunphy is from CROSSCARE. I propose that we continue with the same format we have already used today. I invite Mr. Walsh to make his submission on behalf of the group.

Mr. Jim Walsh

As we are a consortium, would it be okay if I share the ten minutes with Ms Deane?

Chairman

Yes. We can make a special dispensation.

Mr. J. Walsh

We will stay within the time.

Chairman

We do not do it and have not done it yet. Deputy Hayes is attending in the place of Deputy Hogan.

Mr. J. Walsh

We have distributed a synopsis of our presentation which is on salmon coloured paper. I thank the committee for the opportunity to address it. Our perspective on this issue is not an industry perspective. We are not producers or retailers, we offer a consumer perspective on food and the grocery market, in particular from a low income consumer perspective. We look at this matter from the point of view of food poverty. I will explain what I mean by that presently.

I will first explain the evidence base for our presentation, where we get our views, facts, figures and so on. Numerous poverty studies have highlighted food as a critical issue for low income households. We draw on a number of studies that have been done, including research carried out by the Economic and Social Research Institute, ESRI, and a range of other organisations, including Combat Poverty itself.

We represent organisations such as CROSSCARE and the Society of St. Vincent de Paul that are directly involved in the provision of food to low income households. Combat Poverty does not have grassroots experience but the other two organisations have. We came together as a consortium because we could see this issue emerging. We commissioned a study on food poverty and policy which was carried out by two academics. It is a good summary of the evidence in regard to food poverty and policy in Ireland. We also funded a study on the financial cost of healthy eating in Ireland. This study was undertaken by a researcher in the centre for health promotion studies in NUI Galway. That is the evidence base on which we are drawing for our presentation.

I wish to speak briefly on the concept of food poverty. We define food poverty as the inability to have an adequate and nutritious diet due to lack of access and affordability regarding good food. This is a component of the wider issue of poverty but we consider it necessary to ring-fence it because of specific structural issues pertaining to the inability to access an adequate and nutritious diet.

In one sense the issue of food and poverty is old hat. People might say food is a residual element of poverty, that it is something we associate with absolute poverty. We argue that there is a need to reinterpret the role of food as part of the experience of poverty, or more particularly social exclusion, as a dynamic element and as one that has a serious impact on the quality of life of low income households.

Specific barriers exist in regard to food access and healthy eating. It is not only a question of income or attitudes, there are structural problems to do with the market and resources which prevent people having access to an adequate and healthy diet. What we are looking at here is a healthy diet and poor people are as entitled to that as anyone else.

The second matter that suggests a reinterpretation of the issue of food and poverty is the growing evidence that health outcomes are being determined by food and nutrition intake. The link between poverty and ill health, for which there is a great deal of evidence, is mediated through the issue of food.

Food is also crucial from the perspective of social participation. Most people here would associate food with having an enjoyable evening, going out for a meal or having friends over. For people on low income, food has a completely opposite meaning; the connotations are restriction, constraint, shortage and sacrifice. School meals were referred to earlier and there is also a link with education. There is increasing evidence that under-performance in schools is due to children going to school with inadequate diets which affects their ability to perform educationally. Food is emerging as a critical factor in a whole range of social policy areas.

I will move on to show the evidence for food poverty. The Government, as committee members are no doubt aware, has an official poverty measure which is referred to as consistent poverty. That combines low income, 6% of the median, with deprivation of a number of eight basic necessities. Three of those basic necessities are food related items; whether people have access to one substantial meal each day, chicken, fish or meat equivalent every second day and a roast or equivalent once a week. These are very basic measures of quality of life in terms of food.

The evidence from the ESRI is that 5% of the population, 200,000 people, including 60,000 children, are affected by consistent poverty. We argue that this includes food poverty. These are the people at risk of food poverty in Ireland. In addition to that, numerous studies produced by health professionals show that low income groups eat less well and have poorer nutrient intake. There is substantial evidence to show food poverty exists.

In the second part of our presentation we want to look at three specific issues that have direct relevance to the remit of the committee. First, there is the issue of low income food consumption, the constraints faced by people on low incomes and the evidence. Second, there are the problems involved in accessing the food market and the structural problems which constrain people on low incomes from accessing foods. This particularly relates to the idea of "food deserts" in Ireland in which people face physical and other barriers to accessing healthy foods. Third, we wish to refer to low income healthy diets. We all know — and Government policy states — that we should have a healthy diet. We have costed this using means representing the best value for money possible and will present some findings and remedies in this regard.

The final overhead refers to low income food consumption. Low income households spend proportionately more money on food than better off households. For example, the poorest one fifth of the population spends 30% of its income of food, clearly prioritising it. Better-off groups which comprise the wealthiest 20% of the populations spend just 15% of their income on food. However, in absolute amounts based on the household budget survey of 2000, these figures equate to €62.50 per week for low income groups, whereas a better off household is still spending three times as much — nearly €200 per week — even though it spends proportionately less. Therefore, the latter group's purchasing power is far greater, which represents a resource distortion which one cannot get over. There is evidence that even this prioritisation can be affected when, for example, a bill has to be paid and people must often sacrifice foods because they have to make ends meet somewhere else.

Given the small amount of money people can afford to spend, the priority will inevitably be on the quantity of food rather than its quality as healthier food is more expensive. One wants to fill people and make sure they are not hungry but the quality of the food comes second — one will opt for fillers rather than quality. Another issue of concern is that the scope for experimentation is limited. If one is on a low income, the last thing one wants to do is run the risk of any food wastage. Therefore, one will tend to stick with regulars and staple foods that one knows one's family will eat and experimenting with new and perhaps better foods is very restricted. This is also the case in respect of food socialising — either eating in or eating out — which people on low incomes simply cannot afford to do.

We have had evidence of regular shortfalls in food consumption despite priorities being made. A study was carried out by the Vincentian Partnership for Social Justice in 2002 which examined a number of low income households. None of the children in these households was consuming an adequate diet based on current nutritional standards, despite the best efforts by the parents in terms of the amount of time they spent shopping in order to get the cheapest food, even sacrificing themselves to ensure their children would have enough food. Even still, there were clear shortfalls in food consumption in low income households. This is the reality we face in terms of food poverty. I will now hand over to my colleague, Audrey Deane.

Ms Audrey Deane

I thank the Chairman. It is good to be here and the Society of St. Vincent de Paul is very pleased to be part of this consortium. Unfortunately, our message is a very uncomfortable one. I can feel the dissonance when I speak about the stark choices which have to be made by the people. This can include parents not eating because there is simply not enough food to distribute among the children or possibly deciding to feed their children — particularly adolescents — staler sliced white bread because they might eat less of it, which fact comes directly from the report by the Vincentian Partnership for Justice on lower incomes. Ireland is the second most expensive country in which to buy food in Europe. Moreover, as Mr. Walsh has already stated, we have very high levels of child poverty. This is the reality and our experience and we seek to communicate it to the committee today, for which opportunity we thank members.

The research tells us that this issue is all about access and affordability. One can only buy what one can afford and get one's hands on. We are very aware there have been changes in the market, most of them dynamic and very competitive, but they have not all done favours to the constituents whom we represent. For example, larger retailers have undermined local shops. A new phenomenon is that of 4 x 4 vehicles heading down the M50 to shop at Aldi and Lidl. This is fine if one has a 4 x 4 vehicle or can obtain one's own transport to travel to these new foreign outlets. However, for the people to whom we refer, this is not a reality. They must rely on local shops with their limited range and higher costs.

I do not wish to ghettoise particular areas and swathes of urban deserts but the term "food desert" is provocative and emotive and refers to areas inhabited by people who do not have a car but rather a buggy with, perhaps, a four year old walking beside them in cold weather, which is not too much fun. Such people do not have a car therefore they cannot buy very much if there is an inadequate transport system or if the Luas does not stretch to where they live even though it is quite expensive. Many of these people must consider a local outlet or garage forecourts to buy weekly groceries for their children. Food in these outlets may not be of the highest nutritional value, may not be fresh and may not be particularly cheap.

For those reasons, the Combat Poverty Agency commissioned a great deal of research, the results of which are very uncomfortable, without boring anyone to death. Healthy eating guidelines have been agreed with the Departments of Health and Children and Education and Science as national policy. We put that together and took into account realistic approaches to consumption patterns, which means, for example, that items like chips are included because children eat them. We created three specific segments of people who represent low income groups, namely, a two parent and two children group on social welfare, a lone parent and one child group on social welfare and a person on an old age contributory pension. We then compiled a weekly basket of relatively varied food which one would want to eat on a daily basis from a health perspective. The stark finding was that if the family with the two children was to get in touch with the reasonable and healthy options approach to living, they would have to spend 69% of their weekly social welfare entitlement; the lone parent and child would have to spend 80% of their disposable income; and the old age pensioner would have to spend 38% of their social welfare entitlement.

An even more depressing finding was that none of the groupings spent what they should on healthy food, which is of huge concern to us. This is a societal issue rather than just one of competition between producers. Other issues related to own brands versus market brands in these baskets of food. We found that the own brands were 15% cheaper but were not always available to people, particularly when they chose to use the smaller outlets such as Centra, Mace, SuperValu and so on, if they had access to them. There were huge problems in regard to accessibility and affordability, which has a major impact on health inequalities among people which are stark and income-related.

We found that 70% to 80% of certain people's income necessarily would have to be spent in order for them to eat a healthy diet. However, this was just not feasible for these people. That is the uncomfortable message we are bringing to the committee today which has to do with access and affordability.

This consortium has come together and engaged with other stakeholders such as the retailers, distributors and producers. We had a very successful round-table discussion last October at which various corporates attended. We are starting to create some solutions but we suggest that this is really a societal issue and we ask the committee to hear what we have to say and reach its own conclusions. We have some options which we wish to pursue societally. We do not consider that they represent a full suite but we have decided that some of the remedies and recommendations which would help would be key components in making healthy food accessible.

The key recommendation must be that food poverty is ramped up the policy agenda in various Departments. At present, it does not seem to have a natural home anywhere. We have already recommended that a junior Ministry should be attached so that food poverty would be underpinned by a dedicated funding and multi-sectoral committee. This is a recommendation for people outside this committee but, nonetheless, should be addressed from a policy perspective. The market distortions include the cap on the size of food stores and the ban on below cost selling. These restrictions should not be changed.

There is an obligation on grocery multiples to cater for low income consumers. They must ask how people get to the store and how they bring groceries back from it. Some creative solutions arose from our round table meeting with producers but much more could be offered by the various stakeholders. There is a role for the corner grocery shop in disadvantaged communities, not just in food selling and distribution, but also in terms of the social capital it generates. There must be special consideration to encourage and facilitate small corner shops to have a role in communities. This comes back to the lack of transport to the large outlets that are further away.

There is scope within the regulatory environment to develop representation and accountability. The planning process is a key mechanism through which this can be brokered. It must be consolidated and developed and creative options addressed through it to ensure communities get what they need — a variety of shops.

There is a role for local markets and food co-ops. My colleague, Mr. Jack Dunphy, is an expert on the potential of this sector. As a society, we have a responsibility to ensure the grocery retail business is not brokered purely on a competitive nature and that social capital and community needs are taken into account to eliminate food poverty.

Chairman

I was impressed with the growth in turnover of the Dublin Meath Growers Society which represents small family businesses, from €2 million to €15 million in five years. Does the society think the price of its products in supermarkets is high compared to similar products in other European countries? How much higher are vegetable prices in Ireland than in Britain?

Does the TASTE Council think Ireland's recent prosperity had an effect on the demand for artisan and local foods? Does the Combat Poverty Agency think the lifting of the ban on below cost selling of certain food products would be of benefit to low income households?

Mr. Simon Walsh

The Dublin Meath Growers Society argues the price of the vegetables we supply offers good value for money. The primary producer gets 50% of the cost of the product on the shelf. The society is a commercially run enterprise with costs such as refrigeration, transport, traceability, quality control, wastage and distribution to individual stores, which Tesco has consolidated. All of these costs come out of the price, as well as those for wastage on the shelves. Therefore, we offer good value for money in the products we supply. Prices are not hugely out of line.

Last week we went to a Tesco store in the North of Ireland. We picked 12 lines randomly and converted the prices to euro, looking at the retail price on the same day in the Republic of Ireland. On average, our prices were 15% higher than those in the United Kingdom at retail level. Under Tesco Ireland's system, the primary producer gets the majority of this. We know the prices we can pay our growers in the South and the prices growers get in the North. Growers get at least 10% more in the Republic. In the North there is only a handful of commercial growers. People we knew there for years have gone out of business. Even in Britain some of the main commercial growers, with a turnover of £50 million, are going out of business. As a result, prices in the United Kingdom are starting to go back up.

Chairman

Are costs higher here because wages here are 30% higher than in these other territories?

Mr. S. Walsh

They are higher as a result of a combination of factors. Economies of scale are one element. We have some good specialised growers and our prices are coming back down. They are lower than they were two or three years ago, indicating that growers must continue to specialise or we will be unable to compete. We could buy produce for less in Holland and the United Kingdom but as a growers' group, we do not feel that is in our interest or that of the country. We can offer produce that has a good shelf life and is fresh, the key to healthy eating. It is not in our interest to buy Canary Island tomatoes. They do not taste the same as they are grown for long-haul transportation. While our produce will be dearer, we give better value for money. The economies of scale are one factor but there are extra costs. As our wage and insurance costs are higher than those in the United Kingdom, there will always be a disparity in price between Ireland and the United Kingdom.

Chairman

Are insurance costs coming down?

Mr. S. Walsh

Our insurance costs have fallen significantly.

Mr. John Hogan

I have been a grower for 22 years and for the last seven I have co-ordinated growing by the Dublin Meath Growers Society. Our costs have always been considerably higher, mainly because of the reasons mentioned by the previous speaker. We import almost every ingredient necessary for growth — seed, machinery, packaging and servicing expertise for machinery. We are working in a small industry in which we cannot afford to have people waiting for an order for service or a spare part. The cost of transporting a one acre glasshouse to Ireland is €47,000 higher than it is to the United Kingdom or Holland. Everything else is similar. Import costs for vegetable growing, from seed to machinery and packaging, are 30% higher. Fuel prices are 40% higher than the price of gas in Holland.

There is a further cost that has nothing to do with importation. In our business supermarkets work to a specification that is considerably tighter than the standards set by the European Union. While all of the crop is edible, a proportion is either too small or too large. In most other countries there is a processing or freezing market to where much of the crop can go. This does not mean people grow simply to supply these markets but sustainable volumes pass through these outlets every week which means growers can offload surplus product and recover their growing costs. This makes the product sold to the supermarkets cheaper.

Chairman

This is not just an Irish regulation?

Mr. Hogan

I will give an example. Our counterparts in Brittany specialise in growing winter cauliflowers. Like most vegetables, this is a particularly fickle crop to grow as it is very weather dependent with fluctuations in yields from glut to scarcity. Last year, as the weather was mild throughout Europe, the Brittany growers were on their knees. The yield expectations for the sales of their crops only materialised to 47%. They had several discussions with the French Government but only achieved some of the aid needed to stay in production this season. This season cauliflower production in France is 18% less than last season, while the price is approximately double what it was. Last season, Europe produced high yields of crops and again this year, some crops have produced great yields. Before Christmas, several growers from the co-operative visited Dutch onion growers who supply onions to the world market at €50 per tonne. This is €100 per tonne less than what it costs to grow them. Last week, the onions were sold for nothing. The costs of keeping the onions in storage from now until next April, when they may sell them, will be greater than what they will get for them now. Apart from the running costs of the storage fridges, the growers will be faced with the further cost of the bills for dumping them. It is cheaper for the growers to off-load them now for nothing.

Gluts can be useful to feed some of the population relatively cheaply. However, in the long term it serves nobody. Gluts do not serve any purpose because they create an unfair market. In our market, we are trying to marry production to the expected market. If we exceed production by 5%, we will only break every grower in the country. We do not need any great surpluses coming from Europe. However, that is part of the business we are in. Competition, provided it is viable opposition, is what we all want. We are ready for it as we are capable of supplying the product at the right price. However, it must be for the long term.

We began our current business with Tesco in 1997. The level of investment involved then was based over a payback period of ten years. Now, seven years in, we have considerable money to pay back to the banks. However, as a co-operative society, there is also an onus to ensure we give value for money for the large amounts spent by the Irish taxpayer and the EU on the various establishment grants we received. Without these grants, we would never have taken off. Retailers are now prepared to give us a programme at the start of the season with a fair price that will keep us in business and encourage growers to continue in the following year.

Our counterparts referred to education. It is sad to note the number of agricultural colleges that have closed in recent years. Farmers' sons are not rushing into the industry, either agricultural or horticultural. They have seen the economic return for the efforts put in and have realised other industries are much more profitable. While we may like to believe that at 18 years of age they do not know what they are talking about, they actually do know. They are able to add up the figures and decide this is not the business for them. If the profits are so great, as according to the media, why are people then running away from agriculture?

Chairman

I thank Mr. Hogan for that enlightening insight from the coalface.

Mr. Ross Lewis

I will answer the question with my colleague, Mr. John McKenna. I extend my sympathies to the growers, as we are continually coming across small food producers being put out of business by the economies of scale. A local food for local people policy would be a great one, serving many purposes. The demand for artisan foods has become stronger. It is not just because we have become wealthier. The advent of farmers' markets has shown strong consumer demand for these products on the ground. Consumers are now looking for an alternative supply to what one finds on the supermarket shelves.

I represent Euro-Toques, an organisation born out of the sole quest to protect the diversity and authenticity of the flavour of our foods. I do not know any other chef-based organisation that originated from such a quest. Euro-Toques has 200 members in Ireland and represents 170 different restaurants. It is also an international organisation with 4,000 members. We believe that, as people who are primary food users, agriculture must exist at several different speeds and cannot just be linear. Mass agriculture can be there for the masses. However, regional agriculture specific to a region or part of it, such as Seville oranges, must also exist. This is small, artisan production, usually a handcrafted product, that is slightly more expensive. Demand is increasing among consumers, including Euro-Toques, for these products. Euro-Toques believe that if the entire food chain falls into the hands of international food processors, the consumer will be left without choice. The only choice will be those products on the supermarket shelf that are more bland without diversity, flavour and authenticity.

Ireland has an image of being green and unpolluted. Allied with impending agricultural diversification through decoupling of payments, Ireland will have a brand name that cannot be bought. Artisan food producers will now be the vanguard of diversification. They need support and one can imagine the economic potential with such a brand name and natural environment. As chefs, we note that modern and intensive food production methods have not improved the quality of food but the quantity. American agriculture is based on the notion that quantity is everything. If this form of agriculture is adopted, people's livelihood will fall by the wayside and the quality of the produce will be driven down. Taste has been dumbed down by many intensive production methods. It is a significant problem for chefs and restaurant owners. People want their food to be authentic and to feel they are eating a pure and good product. Bacteria is not the only food contaminant. We must ensure food is not contaminated with pesticides, toxins and antibiotics. The health of a nation is also the wealth of a nation. It is our democratic right to eat non-pasteurised cheese as we have for centuries. While we can smoke ourselves to death, we cannot eat non-pasteurised cheese.

Chairman

The question is, "is it no or yes?"

Mr. Lewis

The answer is "yes". As people want to access food with diversity, flavour and authenticity——

Chairman

Mr. Lewis's reputation precedes him. I nearly went to his restaurant last night. However, I must now call on Mr. Jack Dunphy.

Mr. Jack Dunphy

I represent CROSSCARE, a Dublin-based charity with a long tradition — some 65 years — of food provision, feeding hundreds of people every day who live in a variety of poor circumstances. We believe that low cost selling is only a smart marketing strategy that has no long-term benefit for people on low incomes. Whether it is a low price for milk or bread, it simply distorts prices in the short term, with no real long-term benefit for those on low incomes. I concur with much that the TASTE Council of Ireland and the Dublin Meath Growers say in that if we do not get together in this small, closed economy to protect ourselves against what is almost a raid by powerful multinational food retailers, we will all be swept aside. We will be left with a choice of approximately half a dozen shops all of which will be accessible only by car.

Our organisation works in urban areas, within the Archdiocese of Dublin. Already we see the desolation, isolation and compounded exclusion of people from shopping facilities. For example, Liffey Valley on the M50, which was intended to address the need for employment opportunities in Quarryvale, and for good grocery shops and retail outlets, has turned its back on that north Clondalkin area. That experience will be repeated in Cork, Limerick, and all the major cities, and will exclude a significant minority of the population from the simple pleasure of having a choice of shops.

We must support neighbourhood shopping experiences. Artisan food should not be the preserve of people on middle or high disposable incomes. Everybody is entitled to experience good quality food. That applies to all citizens. It behoves all of us to see that nobody is excluded from the choice of access to good quality food.

We have a strong sense that we are going to lose this over the next ten years. Food deserts are very real in the United Kingdom. This compounds social marginalisation of significant minorities and exacerbates various problems such as cardiovascular disease and anti-social behaviour; people feel they no longer belong and are powerless in this situation. The United Kingdom has been concerned since 1995, 1997 and 2000 about retail developments being delivered by retailers rather than by planners, who are almost bypassed. Retailers negotiate directly with the elected officials and the planners, and refuse to put supermarkets in proposed locations because the income there would not suit the profits they seek in a region. These powerful multinational companies are disinvesting. If we are not careful we will have the same experience in five years' time.

Chairman

Does Mr. Dunphy know of any country in Europe, or anywhere, which got this right?

Mr. Dunphy

The European experience——

Chairman

The British experience has got it wrong but have they got it right in France or some other country?

Mr. Dunphy

In other European countries, such as France and Italy, there is almost a reverence for the local producer and shop, and the square to which the market comes. We have lost the sense that we can bring markets to the people instead of building them on the M50, ten miles outside Dublin and that is the choice. Alternatively, one is told to shop in the Statoil station up the road.

Chairman

I apologise for holding members up but this is very interesting. I call Deputy Lynch. Deputy Stanton will speak last and before him Deputy Ned O'Keeffe who is deputising for Deputy Joe Callanan to assist the committee.

Deputy Lynch

I welcome the three groups here. We have never had presentations from such a diverse grouping. I read their submissions about food poverty and the other research, which are interesting. Unfortunately, despite the serious reservations expressed by this committee over the past 12 months, the retail planning guidelines have been abolished. We made the same arguments as Mr. Dunphy about areas being denuded of any type of retail service, whether the forecourt of a petrol station or SuperValu or whatever small corner shop was there. That will happen in various areas.

We never expressed a view on below cost selling and no one regards it as part of his or her brief to defend it, although we have had presentations on it. However, not one multiple made a presentation on below cost selling or the retail planning guidelines. They were not concerned about these issues. We are here to try to understand why food costs more, whether good quality food, or food that is not as fresh as we would want. I am staggered by Mr. Hogan's admission that we are not talking just about the obvious barriers we had accepted would arise in how people set up, whether they had information, whether it is a one-stop shop, whether there is equipment, transport and so on, but we now find that within the industry, apart from legislation, there is a whole mechanism that controls the price of food, whether by dumping or selling it at a particular rate. I am not certain how we as legislators can do anything about that but it is frightening.

Mr. John McKenna

May I make a point on Deputy Lynch's remarks?

Chairman

I will call Mr. McKenna first in response. Two members at a time will ask questions and then the visitors may respond. Deputy Lynch is coming to her question.

Deputy Lynch

As always the Chairman can read my mind. I am startled to find that the obvious barriers, whose removal we thought we were here to ensure, are not the issue but that the industry controls prices to protect its own interests and not those of the consumer. I want someone to explain that because that is why we are here. This process aims to find out exactly how this works. I would like to understand that better because if, as legislators, we can do something about it I would be very interested in doing so.

I have a second question, based on Mr. O'Connor's contribution. If, for instance, transport is a major cost in providing his product, adding 20% extra, why is that not such a major cost for those importing into Ireland? I can never understand that. He rightly says the cost of fuel and shipping is the same for everyone in regard to transport. Why does it cost less for people outside Ireland to distribute their food than for those in Ireland?

My third question concerns the workforce. Does this industry, like every other industry of its nature, depend on workers from outside the EU or the new member states? Most of all I want someone to explain this mechanism of dumping. I am sure the consortium here would like to hear it too because that probably has a greater impact on the cost of food than anything the Government has done.

Deputy Glennon

I join my colleagues in welcoming the three delegations. Unfortunately, due to another commitment I could not be present for the entire meeting. I wish to direct my three questions to the Dublin Meath Growers Society. I have personal experience of that group, which operates in my area, and I congratulate its members not only on the figures which they revealed to us earlier but also on the great stability they have brought to the market gardening and horticultural industry in north County Dublin and Meath. As they said, there has been a frightening fall-off in the number of individuals practising the art of horticulture on a commercial basis. It is very much an indigenous part of the life of people in north County Dublin and east Meath, where the society operates. What it has done in the last few years has been of immense benefit in stabilising income for the industry. I congratulate the members on that and wish them well for the future.

How much of the Irish market is supplied from within Ireland and how much is imported? Of the Irish proportion, how much does the Dublin Meath Growers Society supply? How much of the Irish market is grown under cover and is therefore reliant on energy and — particularly in the north County Dublin area — the price of gas? The society might comment generally on the price of energy with regard to under cover growing in the horticulture industry.

In its submission, the society also made a brief reference to insecticides. I am aware of major divergences between the pesticide regulations in Ireland, Northern Ireland, the UK generally and many other EU countries. Is it true that many insecticides are not available on the Irish market because the horticultural industry in Ireland is so small?

Chairman

I thank the Deputy. I will next call Deputy Ned O'Keeffe and Senator Paul Coghlan. I ask for reasonably brief responses because we have the room booked until 4.30 p.m. and I assume that we will extend that to 4.45 p.m. Mr. McKenna was interested in responding to Deputy Lynch's general overall view. We will then have personal questions.

Mr. McKenna

Regarding Deputy Lynch's question, part of the difficulty in the Irish food economy results from a lack of dynamism. The number of major players in the supermarket chain is small. The book I have written is about the community of artisan food producers and since its last edition the book has grown by over 400 pages. The biggest dynamic in the last five years within Irish artisanship has been the growth of farmers' markets. There are a number of reasons for this, and why the movement has been so dynamic. The consumer wants more real choice. What supermarkets offer is an illusion of choice. Identical products are packaged differently, but in terms of quality the olive oil from Spain is the same as that from France.

Many of the Irish artisans have in recent time appreciated that through superior standards of production, animal husbandry, animal welfare, use of pesticides or organic and biodynamic methods, they can offer the customer a much higher quality product. Many people in this room may not realise this but commentators from outside, journalists whom I meet in the course of my work, are aware that Ireland produces some of the greatest food in the world, in particular our artisan foods. In the five years since I last published this book in one volume, it is that sector which has been dynamic. That is partly because people want more choice and are prepared to go to farmers' markets to get it. They get that choice there, particularly on the east coast of Ireland over the last three years.

We talk of the importance of the tourist economy, which my colleague Mr. Ward mentioned. For the tourist to have a successful and satisfying food experience is a pivotal part of what the island of Ireland can offer. If we want not merely to retain the image of Ireland as the food island but to improve it, the quality of the foods we offer is of great importance.

What has also happened is that the producers want independence. This comes back to the point about costs. Artisan producers do not want to be rich but to live where they live and make a living. My local cheesemaker in west Cork lives three and a half miles up a mountain and has run a business for 20 years which has made more money every year. Of how many food industries in Ireland can this be said? The cheese in question is internationally known and revered for its reputation as a top world class raw milk semi-soft artisan cheese from Ireland.

What is interesting is that while the artisans have gone to the markets to gain independence, one of the main obstacles to independence is the bureaucratic system. The environmental health officer might insist for example on stainless steel equipment to the value of €500,000 being installed in a premises. If that were done, the artisan product would have no quality because there would be no sense of its place, a key element. We have a wonderful agricultural culture in Ireland because it is all different. The pastures in Donegal are different to the pastures where I live in west Cork. This is one of the elements we must protect and nurture but we must ensure that the visiting environmental health officer understands the skill of the artisan. It is wrong to adopt a simple scientific approach and say that things must never change or be any different. We must have a sympathetic application of regulations. I am not arguing for the removal of regulations. France, Spain and Italy have regulations yet they have the greatest food cultures in the world. We can join them if the environmental health officers and the bureaucratic system assist people and if there is no immediate insistence that an artisan must spend €500,000 for example. How can one have rural development if the local bureaucrat insists that so much must be spent in order to establish a business? The multiple retailers then insist on another similar sum being spent.

There can be no dynamic in a food economy if there are obstacles from the bureaucratic and the retailing side. In a manner we must return to basics. This is why the farmers' markets have been so successful in the past five years. They are a return to the simple, logical economics of food production and retailing, and the added benefit we get from that is that people have access to truly world class artisan foods.

Chairman

Would Mr. O'Connor like to respond to the various questions from the two Deputies?

Mr. O’Connor

Three of our speakers will respond.

Chairman

They are allowed two minutes each.

Mr. S. Walsh

The Dublin Meath Growers Society originally involved a very fragmented market, like the artisan foods market. We realised we must get into the multiple markets. There has been talk of barriers and costs. The Dublin Meath Growers Society has the central facilities to handle the products and deal with the supermarkets on a commercial basis. That has to be done. I invite artisan representatives to visit, to see what we do and if it has relevance to what they do.

Chairman

The society has distribution mechanisms.

Mr. S. Walsh

Yes. We invested in a central area with help and 100% commitment from Tesco. Through us, the grower calls when imports come in. We call the imports but in effect the primary producer calls them, which is of huge benefit to us.

Regarding dumping, John Hogan and I noted that if product produced abroad is in the Dublin market it will sometimes end up on a supermarket shelf or will be sold at the expense of growers. Nothing can be done about that. We have an EU market. We might perhaps educate people in order that they do not buy such products but to look at the boxes and the branded Irish product. We do not buy in that market. We honour our commitments to our growers. When a grower, because of an over-supply caused by imports, has to rotovate into the ground products produced for a market, that has a very negative impact on Irish growers.

The transport problems are the same for everyone. However, compared to the UK Irish transport costs are higher because the population is much more diffuse. Take Holland, for example, which is the size of Munster, with 17 million people or Birmingham in the UK with 4.5 million, equivalent to the population of Ireland within a relatively small confined area. There is an additional transport cost and that is why the retail price is slightly higher over here than, say, in the UK or Holland.

Our industry is heavily dependent on foreign labour mainly from the new accession states. I would say it accounts for approximately 70% of the workforce in the field, from the grower's perspective. The workforce in north Dublin and County Meath comprises in the main the families involved in the business as well as some Irish workers in the larger units and foreign labour. That is a fact of life. Irish people do not want to work in the fields any more.

Deputy Glennon asked about produce grown under cover. In this regard I must emphasise that we have substantially higher fuel costs. What we pay the grower through Tesco for Irish tomatoes is 85% of the price paid to us. That is what he or she needs to survive. Tesco was the only multiple to supply Irish tomatoes last year throughout each season. That is part of the problem involved in growing tomatoes under cover.

Chairman

Is Mr. Walsh saying Tesco was the only multiple for the entire year with Irish tomatoes?

Mr. S. Walsh

For every week of the year. I know this for a fact because the position was monitored by our society. Perhaps Mr. John Hogan can deal with some of the other questions, on pesticides.

Mr. O’Connor

I would like to follow up with a few comments as regards Deputy Lynch's point on comparisons with the UK. One key aspect should be emphasised. I was at a seminar about a year ago where the Taoiseach indicated that when Tesco was first coming into the Irish marketplace it was feared it would forget about local suppliers and utilise all its contacts on mainland Europe and in the UK. It was acknowledged then and I would confirm today that Tesco did not do that. It has consistently implemented programmes for members of the Dublin Meath Growers Society, and not just us. There are many other growers who operate the same modus operandi and this needs to be appreciated.

Relative to transport coming in from the UK, Deputy Lynch is correct as regards this being a necessary cost fact. However, the other side of the equation, as alluded to by Mr. Walsh, is that economies of scale allow such goods to be imported at a cheaper rate. It could be argued that this is good. We must accept that if we want an Irish growing industry. The fundamental question is whether we want an Irish industry. In the event, cheaper products will be brought in and arguably groups or private companies could make much more money by doing that.

On the question of the workforce, without the advent of labour from eastern Europe and particularly the accession states I do not believe that any of the low pay industries would be able to get people to work in them any more. Speaking on behalf of the society, its growers and the industry itself, we have been careful to ensure that overseas workers operate in accordance with the same legislation governing their Irish counterparts.

As regards Deputy Glennon's question about market share, approximately 65% is Irish and 35% is foreign. Of that, Dublin Meath Growers Society growers have about 20% of the total market. We have a 12-month business with our customers and it would be difficult to sustain such activity without having an import business as well. The society has been lucky in that the commitments obtained from Tesco allowed members to bring in imports from English companies. That enabled us to look at our overall cost structure over a 12-month period and is a key component of our strategy. Finally, just before Mr. Hogan comes in — and he might have some comments to make on this — tomatoes account for the majority of our produce under cover. Fully 100% of tomato growing is done under cover. We are trying to compete with areas in Spain, for example, where there is no need for heat or glass. The problems were mentioned earlier by Mr. Hogan, as regards importing products for glasshouses and the price of gas. Our growers in Rush continuously complain they are paying 25% to 40% more for gas to heat the glasshouses. We want early season crops so that the Irish season may be extended for as long as possible. To do that the gas must be turned on earlier and applied at greater levels of intensity. Ironically, the more gas that is applied the higher the cost. Thanks to the market agreements that are in place we agree seasonal prices on nearly all our lines but in particular on tomatoes. The situation differs from year to year, but last year our growers would be getting two to three euro more than those who tried to sell on the open market. That is of enormous benefit to the Irish industry. I will now let Mr. Hogan comment on pesticides.

Chairman

We will hear two quick comments, please.

Mr. Hogan

The subject of pesticides has involved serious discussion by everybody. I have listened to my counterparts here talking about safe food. Safe fresh food is the consumer's choice Some 86% of the people surveyed in Ireland in October wanted fresh Irish food. That is what people live on and it is our job to supply it. It is not a question of how it looks but of what is contained within it. The fresher food is the more natural the elements within it and that is good for healthy eating. Aligned to this is the fact that food does not need to have any unnecessary pesticide contained within it. In 1993 the European Commission set up a commission to establish a level playing field for all participating countries, to have the one platform for chemicals. It is a long process and has not been too successful. There are currently about 180 active ingredients that may be used in agriculture. Our counterparts in Spain and Portugal have close to 800. We are not on a level playing field and we do not want to be. However, on the basis of analyses conducted by Department of Agriculture and Food, particularly within the last five years, there is no doubt that Irish food is the safest by far from a pesticides viewpoint, and long may that continue. Every month we carry out for our growers, through the Tesco organisation, a minimum of 20 checks at random on our products. The bill for analysing our crops three years ago was in excess of €35,000 per annum. Thankfully we have not exceeded what is known as a maximum residue level over the three years. We are happy to confirm that our food is very safe and I want this to continue. It may be costly, but along with freshness, continuity of supply and a fair price, the consumer is demanding safe produce. We are guaranteeing that. It is another area where cost is involved. In supplying this product to the consumer every new year another area has to be taken into consideration which costs us money. I have no doubt that our products in the supermarkets are cheaper than they were three years ago. I believe that this will continue because that is the effect of competition. We are equal to the task. However, we want the opportunity to educate the consumer into accepting that the product that is grown and sourced locally, where the traceability time is much shorter, is what he or she needs to eat. Although there is a premium to be paid for it of up to 15%, I honestly believe that it represents great value for money. I also think that a majority of those here believe that it is value for money.

Senator Coghlan

I welcome the groups here today. In spite of their diversities, there are many similarities between them. The most interesting point made was that consumer choice is limited to what the buyers of the major groups decide. That shows the danger of giving them dominance and free rein in the market place. If it were left to this committee, there would be no change whatsoever to the retail planning guidelines. I was particularly struck by what one group claimed about the larger retailers undermining the local shops. Can the group tell this committee what it should recommend for low-income people and pensioners who cannot travel to these out-of-town places?

Has the Dublin Meath Growers Society seen any other growers leave the market as a result of changes brought about by Tesco? As a percentage of sales, what margin do the supermarkets have on the growers' products supplied? Does it consider that the Groceries Order should apply to vegetables?

Have the members of TASTE had positive experience in dealing with supermarkets? Has globalisation had a positive or negative effect on the food industry, in their experience? What practical action can the committee recommend to bring about short and local food chains? In its submission, TASTE stated that town planning needs to be balanced and that because of its effects on indigenous local business, retail planning guidelines should be retained, including the cap on the size of retail floor space. Are the products of the members of TASTE more likely to get shelf space in large stores than in small stores? Could Mr. Walsh and Ms Deane tell us what they think the committee should recommend on the protection of the underprivileged and those who do not have the transport to go to these out of town stores? We want to see local convenience shops as we know how important they are for those the groups are representing today. I would like the groups to tell us succinctly what they think we should recommend.

Chairman

The Senator is in favour of the convenience stores at any rate.

Senator Coghlan

Absolutely. We do not want to see choice limited.

Chairman

We all agree with that.

Deputy N. O’Keeffe

I welcome the delegations here today and I am very impressed with what they have had to say. I agree with everything Mr. Dunphy of CROSSCARE said about the retail area and the gimmicks that are in place for shoppers. It is destroying the image of the country. Setting up shops in Ballymun or in Mahon on a large scale is not the answer to the marginalised of our society.

Why is the price of gas so much dearer in Ireland than in Holland, when we have a national grid that links us to the North Sea? Gas is sold at a preferential rate to the retail industry and to the agricultural industry. As there is no VAT or excise, where is the problem? The chief executive of Bord Bia made the point yesterday that we had great success in exporting consumer foods. How much of the consumer food that was remanufactured in Ireland was actually of Irish origin? The groups mentioned the food island, yet we do not have much speciality or regional food.

Pesticides were also mentioned. I have never seen a prosecution against an importer, but I have seen unfortunate Irish producers prosecuted for overuse of the pesticides or fungicides that are used in intensive industry. When I go to the Dublin market, I can see horticultural produce from the four corners of the earth. Many countries abuse the system, overspray crops and even damage the health of the workers on the sites where they have used sprays, yet the products of these countries are getting through the system without being tested. Young people, who carry out a genuine effort on behalf of the Irish people and Irish growers, are coming up against these problems because of existing regulation.

Mr. McKenna spoke about stainless steel. We cannot get the same flavours from stainless steel as we do from earthenware or from other utensils and I agree with him on that. The legislation should be more specific in the area where the environmental officers operate within the Food Safety Act. I advise the groups to make a submission at some stage, as we can amend legislation. We are here as legislators to help rather than to destroy the industry.

Why is the Irish market so attractive for dumping? Germany has a market of 80 million people, Britain has over 60 million, while Holland has 15 million people. What is the advantage in dumping in Ireland, where there is such a small market? I have a liking for tomatoes, like most people here I am sure. However, I want to tell my colleague, Deputy Lynch, that they have lost their flavour. I do not think that transport has caused the tomatoes to lose their flavour. Something has happened in the development of the tomato and I am not sure if it has something to do with where the seed is grown.

By and large, the Irish food sector can only rotate to grow single crops, yet many of our horticultural imports come from countries that are double-cropping and are not even breaking the rotation. To do that successfully, they have to sterilise the soil for growing potatoes intensively. I would not like to name the countries, but I know of one country that has a product called Aargauer potatoes. These countries are also double-cropping for carrots, which is against nature as we understand it. The delegation here is carrying out genuine work, but why is there not more exposure of the weaknesses of these imports? It could only educate the Irish consumer. I know the discounters and the major multiples are playing these groups off against the imports, but the groups have a job to do if they are to be successful. Rotation is very important, as is double-cropping. I do not want to hog the meeting as I am not a member of the committee, but I do have a keen interest in this. The Chairman is very impressed with me.

In Ireland, we do not use hormones for meat production, whereas in many parts of the world hormones are used to obtain greater yields of milk. We have a very fine quality product in this country. In that situation, a producer will look for a higher margin because he will be producing less. These are the areas that we have to expose, but I sympathise with the delegations and I am very sympathetic to the north Dublin growers, who are very genuine people. They have had difficulties with the weather and have had to use a certain amount of pesticides and fungicides for control, yet a Chilean or an Indian product that has been sprayed to death is displayed in the Dublin market, while our own producers are held up in the courts.

Chairman

Is the Deputy calling for a new regulation to be introduced in Ireland in regard to the difficulties that have arisen or could arise from this over-exposure to pesticides?

Deputy N. O’Keeffe

I am stating that there is not a level playing pitch vis-a-vis imports and the Irish grower. We are over-regulating and I fully agree with what Mr. McKenna stated in regard to cheese and the utensils and equipment used.

Deputy McHugh

Does the Dublin Meath Growers Society deal with any body other than Tesco? The society seems to dance to that company's tune all the time and continually refers to it. However, it is not alone in this. Many groups which have come before the committee seem very well briefed by Tesco. Perhaps it is unfair to say so but this is how the continual reference to the Tesco organisation comes across to me. Can the society say whether any of the actions taken by Tesco since its arrival have led to the elimination of any of the growers from the society's area? Has the TASTE Council found that people had more money to spend in recent years and are turning more towards its products than previously?

I note the response of the Combat Poverty Agency representatives to some of the statements made. Will the agency comment on the statements and does it agree with them? If the agency disagrees, it could be of benefit to the committee to know what its disagreement is. I have listened, looked and read but still do not know whether the Combat Poverty Agency is in favour of removing the ban on below cost selling. Is the agency in favour of the removal or retention of the ban?

Senator Leyden

The issue has been well covered. One area which has not been mentioned is the need for more organic products. There is significant demand for and difference between organic and other products, although I am not sure whether the Dublin Meath Growers Society has a section dealing with this. One aspect that could maintain the quality of food and its saleability abroad is in regard to the lack of incinerators in Ireland. I hope that before any decisions are made in regard to the location of incinerators, account is taken of areas of significant production of agricultural and horticultural products. Irrespective of the facts of this matter, toxins can become a reality.

The quality of food we produce is a major asset. As stated, some 86% of the public want and demand that product. It is a matter for the growers to sell the idea of consumers choosing to purchase Irish grown products, where available. With regard to organic products, there is a major difference between quality Irish products, such as potatoes and cabbage, and any imported products. This idea should be sold more and more.

I appreciate the position of the Combat Poverty Agency, the Society of St. Vincent de Paul and other organisations. It is difficult to advocate the development of organic products considering the price which must be paid for them. I accept that there are two different areas and that there is no point asking those in the lower levels of the economy to buy higher priced products. In the past, everyone had an extra bit of garden where they could produce food but that time is long gone and will not, unfortunately, return.

Senator White

I would like to raise with Ms Deane a point about local shopping and the lack of access to food products. There has been huge growth in the number of local SuperValu and Centra outlets apart from the development of Superquinn, Tesco, Lidl and Aldi, and growth in convenience shopping. Moreover, there is huge competition between Superquinn, Tesco, Lidl and Aldi. However, to resolve the problem, I recommend that, as a planning condition, the provision of a shop would be a conditional part of the planning process for social housing in any area.

I do not want to mention names but I know of shops in certain economically deprived areas which do not have the wide range of products referred to which children need. I agree with Ms Deane that this must be addressed. I have much experience in this area. Two Traveller friends who visit me regularly have terrible diets.

I must declare a vested interest in this matter. As with the Dublin Meath Growers Society, Tesco has also been a huge help to my company, which exports much of its produce to Tesco. Deputy McHugh sees this as a negative but a company either stays small or-——

Deputy McHugh

I must correct that. I did not mention the word "negative".

Senator White

The Deputy's tone was negative.

Deputy McHugh

I was asking questions as I am entitled to do as a member of the committee.

Chairman

That is correct.

Senator White

I am simply outlining my experience to the committee. A company can decide to stay small but may not be able to survive if it does so. If one gets an opportunity, one must go with it and the Dublin Meath Growers Society and my company wanted to grow. However, I accept that there are conflicts and difficulties. What happens in other countries such as Italy where there is a speciality? In Spain last week I visited a large supermarket to buy food and found the standard of the fruit and vegetables very high.

Chairman

I ask the Combat Poverty Agency to respond.

Ms Deane

I will go back to Deputy McHugh's point. I did not make it clear but the agency is in favour of keeping the ban on below cost selling in place.

Senator White

Will Ms Deane repeat that?

Ms Deane

We are in favour of keeping the cap and ban in place. Can I go back to the point the other speaker made in regard to——

(Interruptions).

Chairman

Members and the visiting delegation should speak through the Chair, please. Ms Deane is replying and I ask those present to acknowledge the manner in which the Chair has requested the meeting to be conducted.

Ms Deane

Thank you, I will shortly hand over to Mr. Dunphy. With regard to the comment on the power of the multiples in deciding where outlets are located, we feel there is a role for a stronger regulatory framework within which the multiples would be required to trade-off and locate a smaller scale presence in disadvantaged communities, but one that stocks a reasonable range of healthy options.

This brings us to a further point that while there may be Centra, Spar and Mace outlets, they often do not exist in the food deserts which we have tried to explain to the committee, where a shop for 4,000 people may be somebody's front room or a garage forecourt. We need to be clear on the type of people we seek to represent and their struggle to afford and access a reasonable diet.

Mr. Dunphy

We would fully support the development of local alternative food markets. It would be a development of the farmers' markets in high-income areas. Everybody has the right to buy good quality food. Such a development may have to be supported and driven by some type of local authority involvement or promotional role for Bord Bia, for example, and this would require a commitment of time and investment to bring food to where people live.

Regarding dumping of products, we run the only food bank in Ireland that offers an organised, structured mechanism for the redistribution of products from the marketplace. Dublin Meath Growers Society Limited support this Dublin food bank concept, where we have a central warehouse for goods that are over-produced or are involved in promotional units from the food industry. We support approximately 79 charities in Dublin through the provision of over-production foods. There is never a need to drill it back into the ground. We are also supported by the exclusive grower for Superquinn which supplies carrots that do not make the grade, whether they are crooked, small or fat carrots. All these food items have another life that offers a social, useful and viable alternative to dumping.

There is a significant network across Europe of food banking whereby this mechanism is in use for food industry produce. Some 47,000 tonnes of food were redistributed across France, Italy, Spain, Greece, Portugal and Ireland last year. Through a central warehouse in Dublin, we handled approximately 700 tonnes of food that would otherwise have been land-filled. There is no need for the latter approach as there is an entire social network that can manage over-production.

Deputy Lynch

It should not be done.

Mr. Dunphy

That is correct, it should not be done.

Mr. J. Walsh

Much of what we have spoken about concerns controlling the market, which is difficult to do. However, there is an area in which the State can have a direct role. I refer to points made earlier regarding the value of local produce and the examples of schools in Italy providing local food. We do not have a national school meals system. If such were in place, there would be a clear benefit for all children, particularly those from low-income households. There are significant issues for all children now in terms of food consumption because of concerns regarding obesity and dental health, for example. This approach offers a major health gain for children and a significant gain in terms of providing an outlet for Irish produce. The State must introduce an adequately funded and health-orientated school meals system which would begin at primary school level. Such a scheme would require minimal investment but could yield significant benefits.

Mr. Ward

I will address the question of whether many of our members are affected by multiples. A number of members trade successfully with multiples and have managed to grow their business through good relationships with one or several multiples. However, the feedback coming to us from members is that an audit from a multiple on a small business is more penal than that of a State regulatory agency. Some of our members rely on the business provided by multiples. Perhaps the latter need to take a more sympathetic view because they are the first to raise the flag in claiming support for the Irish food industry.

Most local and convenience shops, other than speciality food shops, are aligned to a chain or purchasing group. Some of those mentioned today purchase 98% of their produce from central distribution. The day is gone when someone with a garden surplus of courgettes, tomatoes or other vegetables could drop them into a local shop. The shop operating system does not allow such an approach and this is an area that should be reviewed.

For many of the successful family-owned chain businesses, their only concession to local involvement is the provision of a notice board. These businesses should look to what is grown in their local area and the demographics of their customers. They might include a dedicated section in their shops to promote local produce. Many local growers can enjoy significant success.

Our organisation is strong on the issue of retail planning guidelines. The tenth conclusion in our submission states that: "Town planning needs to be balanced and conscious of its effect on indigenous local business and tourism, going forward. Retail planning guidelines should be retained, including the cap on retail floor spaces". My own town of Nenagh is facing 200,000 square ft. of new retail development on its periphery despite the existence of 17 successful and beautiful food businesses in the town centre. These businesses are facing difficulties regarding the provision of customer parking, for example, and this is a national issue. Town centre protection policies must be implemented for the butcher, baker and candlestick maker. Local authorities must foster the farmers' market and provide some type of cover and service.

A question was put as to whether affluence is adding to consumer spend on artisan foods. Mr. Dunphy has already made the point eloquently that artisan foods should be available to all through farmers' markets. The potato has been long valued in this country and its taste was open to everybody, not just the top of the market. Education is important in this regard because the children of affluent parents eat foods of poor quality as much as everybody else.

Mr. S. Walsh

In the time remaining, I shall address some of the questions put by members. Of the 60 or 70 growers, three members and six or seven growers no longer supply us for various reasons. Some have gone into other products such as potatoes, for example. I do not see below-cost selling as any advantage. Some years ago, supermarkets were selling cabbage at 9p a head. This approach is of benefit to nobody. We would prefer to get a fair price and that a fair price be charged.

Some 80% of fresh produce is sold through the multiples market. Buyers are important and it is part of our job to educate them. We work closely with them to impart information about what we want, how products may sell, how the growing season is going and changing specifications to ensure that products will hit the shelf.

As has been observed, gas is 40% more expensive in Ireland than in The Netherlands.

Deputy N. O’Keeffe

Why is that?

Mr. S. Walsh

I do not know. I will find out and give this information to the committee at a later date.

Regarding pesticides, I would like to see a level playing field through the provision of EU legislation that allows every country to use the same products. We should not compete with growers in Spain who can use four times the number of sprays.

Chairman

Does Mr. Walsh agree with Deputy Ned O'Keeffe's view on this matter?

Mr. S. Walsh

I do.

Some members have raised the issue of the taste of tomatoes. In the past, tomatoes were grown in the soil but are now grown in bags. We grow our tomatoes without the use of any pesticides. We supply Tesco and also Marks and Spencer, North and South. The latter represents a reasonably small, niche market. This is why we continuously refer to Tesco. However, our growers also supply Dunnes Stores and SuperValu. Any members who wish to come and see our operation are welcome to do so.

Questions were asked about dumping, the price issue and the market here in comparison to that in Germany and other countries. The market is fragmented in Ireland and many consumers will buy on the basis of price alone. Growers have not been co-ordinated in their approach. Our function is to co-ordinate production and selling among growers. Many people will import from a British supplier if the price is cheaper than that available in Ireland. The fragmentation of the market is culpable in this regard. It has been mentioned that growers must undergo audits. We provide assistance for our growers in undertaking their supermarket audits.

Organic production is specialised and is more suited to growers further down the country. We are involved in areas where we have been utilising the land for a long time. Organics is a growing market. We hope over time to bring the cost of organic produce into line with conventional prices. I thank the committee for inviting us to make our presentation.

Chairman

I thank the delegations from the Dublin Meath Growers Society Limited, the Combat Poverty Agency and the TASTE Council for attending the meeting today. The committee will now adjourn until 10 a.m. on Thursday when we will hear a presentation from Retail Ireland.

The joint committee adjourned at 5.05 p.m. until 10 a.m. on Thursday, 13 January 2005.