Tá áthas orm deis a fháil labhairt ar an ábhar tábhachtach seo a bhaineann le postanna agus bia sa tír seo. For some time I have been extremely concerned at the perceived power of the supermarket multiples and their treatment of farmers and growers in the contract decisions being adopted, in particular for fresh product lines in the fruit and vegetable sector.
The responsibilities of the large supermarket chains operating in this country do not and cannot be allowed to stop at consumers and shareholders. Their responsibilities must also include primary producers, processors and suppliers. For these reasons, I have been engaged for some time in a series of consultations with the various stakeholder interests to try to identify the specific difficulties and problems which are being encountered constantly by producers in their ongoing relationship with the multiples. Indeed, balancing interests is essential to securing a sustainable food sector and ensuring consumer choice.
While multiples are clearly the main route to market for most fruit and vegetable producers, other routes need to be developed to improve the resilience of the productive sector. These routes include farmers' markets, of which more than 130 are now in operation in Ireland, a growing number of farm shops and new box scheme outlets. While they are evidence of market opportunities, their individual success will depend on how well they deliver to consumers in their areas and on increasing consumer interest in seasonality and freshness of produce. The new code of good practice and banner for farmers markets which we developed in consultation with stakeholders has been well received, with applications from 28 markets to date. Such has been the interest that we will open up a second application period in the autumn.
Bord Bia's timely best in season initiative highlights to consumers what fruit and vegetables are available in Ireland and when they are in season. Each month until the end of the year the campaign will focus in the press and digital media on freshness, taste and health benefits of produce in season. All promotional activities are directing consumers to a website, www.bestinseason.ie, which showcases the availability of fruit and vegetables when they are best in season in Ireland. In June strawberries were the focus, while in July new season potatoes were featured. In September there is a major focus on back to school and the role seasonally available vegetables and potatoes play in a healthy balanced diet for children, particularly as we approach the winter months. In addition, articles on seasonal themes are targeted at food writers. Seasonal purchasing tends to involve more Irish produce and it is important that people recognise what is in season.
The issue of food prices, the differentials in prices between this jurisdiction and Northern Ireland and the UK and the impact that this is having on all sectors of the retail chain have been matters of debate and concern for some time. Arising from various concerns expressed and the impact that the North-South price differentials were having on employment, business activity and income to the Exchequer, the Tánaiste initiated an engagement in June 2008 with all the links in the retail chain, including retailers, suppliers, distributors and manufacturers, to bring greater transparency to the reasons for the price differentials between the North and the South. As a result, the Tánaiste requested Forfás to carry out an analysis of the relative cost of doing business in a number of locations in the Republic, Northern Ireland and the UK. Forfás analysis, which was published late in 2008, found that while the cost of doing business was indeed higher in this jurisdiction, the extent of this additional cost would only justify a differential of 5% to 6% in prices between the South and the North.
Retailers have also expressed concerns about the cost of sourcing goods in Ireland, which they maintain is significantly greater than similar costs in Britain and Northern Ireland. On the other hand, suppliers and distributors have contended that there is a significant imbalance in the relationship between retailers and suppliers which is giving rise to suppliers being squeezed by the increasingly difficult demands being made by retailers. The presentation by Keelings was interesting in that regard. At the request of the Tánaiste, the Competition Authority carried out a study of the retail import and distribution sector to ascertain how competition is working and whether any practices or methods of competition are affecting the supply of goods and services in that sector. The authority's report on its findings, Retail-related Import and Distribution Study, was published at the end of June.
Trade representatives of suppliers and manufacturers have also claimed that retailers, especially the large multiples, seek better terms from suppliers on the basis that if suppliers do not meet their demands, supplies will be obtained elsewhere, including from abroad, with the consequence of indigenous suppliers being put out of business. In this regard, section 5 of the Competition Act 2002 prohibits abuse of a dominant position. In order to establish that there has been a breach of section 5 of the Act, the Competition Authority must demonstrate to a court that, first, the business in question holds a dominant position in a relevant market and, second, that it has abused that dominant position. This concerns the abuse of dominance but it is not illegal to be dominant. The definition of what it is to be dominant makes it difficult to follow through on any allegation which is made and holding 35% of the overall market is a significant percentage.
Persons aggrieved by a practice or an abuse prohibited by the Competition Acts 2002 to 2006 have the right to take a private action under the Acts. Relief by way of an injunction or declaration or by damages, including exemplary damages, is available in such actions. Alternatively, complaints alleging a breach of competition rules may be referred to the Competition Authority for investigation. A person who has evidence of retailers engaging in prohibited practices should bring that evidence to the attention of the Competition Authority in order that it may be fully investigated. However, that is easier said than done.
The reluctance of suppliers to initiate an action under this provision has highlighted the need to bring forward additional provisions to tackle the problems we are here to discuss. In this regard, we have had very frank exchanges with the representatives of the various stakeholder interests. I readily acknowledge that retailers must strike a balance between value for consumers and a fair return to producers and suppliers. This is a prerequisite of a viable indigenous fruit and vegetable sector which has been placed under considerable strain by the ever increasing pursuit of low prices by the supermarkets.
This sector, about which I am particularly concerned, forms only one element of the overall grocery trade. I have also been working closely with my colleagues in government, in particular the Tánaiste and Minister for Enterprise, Trade and Employment and her Department, on the details of a code of practice for this whole area, which I have been advocating for some time. This has culminated recently in the publication by the Tánaiste of a consultation document on a draft code of practice for the grocery goods sector. The consultation paper has sought the views of all stakeholders, including producers, suppliers, retailers and consumers, on the possible introduction of the code. It asks eight key questions of stakeholders, including consumers, which include: whether any code of practice should be voluntary or statutory in nature; how it may best be enforced; whether a separate ombudsman's office should be established; whether there should be a threshold to limit its application; and the impact the application of such a code may have on consumer choice and prices. It also includes an initial draft outline of such a code of practice and seeks views on its provisions. The drafting of the code is based on international best practice. The question of whether it can apply to goods obtained outside the jurisdiction is being worked on.
These proposals are an attempt to address the concerns raised about the relationship between suppliers and retailers. The key objective must be to address the need to strike a proper balance in this relationship within the retail sector. Throughout the process of our consultations I have met and heard from suppliers who are afraid to say publicly what they will say to me privately for fear of being identified and ultimately targeted by retailers. Many allegations have been made relating to requests for payments such as hello money, market support funding and advertising and promotional money, all of which have been consistently denied by the multiples. This is the reason we urgently need the code of practice and the appointment of the retail ombudsman which should have statutory backing and powers which would be legally enforceable.
The issues we are trying to tackle are not confined to Ireland. My colleague, the Minister of Agriculture, Fisheries and Food, Deputy Brendan Smith, and other EU agriculture Ministers have intervened in the matter at recent Agriculture and Fisheries Council meetings in Brussels to draw attention to what is a Europe-wide phenomenon. In response to these approaches, Mariann Fischer Boel, EU Commissioner for Agriculture and Rural Development, has undertaken to complete reviews of anti-competitive practices in the retail sector and report back to the Agriculture and Fisheries Council by the end of the year.
The high level group set up by the European Commission has made useful recommendations and proposed a roadmap of key initiatives. The proposal for a European forum to address relationships and practices along the food chain has much to offer, as does the Commission review of potentially unfair or anti-competitive commercial practices. The roadmap includes consideration of codes of conduct for certain retail practices and work on this should be prioritised because a common approach is important to ensure fair dealing and optimal functioning of the food chain. The balancing of interests is essential in securing a sustainable European food sector and ensuring consumer choice.
The Department of Agriculture, Fisheries and Food has been consistently supportive of the horticulture sector under its grant aid schemes for many years. This involves the protection of taxpayers' money as well as ensuring we have maximum employment and a secure and sustainable source of food. The taxpayer, through us, has paid out €30 million in grant aid to producers since 2000 under the scheme of investment aid for the development of commercial horticulture to support investments in excess of €80 million in the industry. In addition, the capital investment scheme for marketing and processing also provided grant aid of €16 million in respect of horticulture projects. These schemes have been the catalyst for investment and growth and have assisted producers to upgrade and develop new production facilities and improve quality.
Also under the scheme of EU aid for producer organisations of fruit and vegetables, €35 million has been allocated to Irish producer organisations for the programmes implemented from 1999 to date. These programmes are designed to assist fruit and vegetable growers in the implementation of approved operational schemes to improve product quality, boost commercial value and promote the use of environmentally aware farming and husbandry techniques. All of these supports are essential to improve our competitiveness, bring about more sustainable production and assist growers in meeting the demands of retail outlets in terms of the ever increasing production standards demanded by consumers.
Most fruit and vegetable growing businesses in Ireland are family-run, with many in the business for several generations. Keelings is a good example. There has been significant consolidation in the sector in the past ten to 15 years. As a result, there are now significantly fewer growers than 20 years ago. Those who remain in the business are considerably larger in scale and many of them have invested heavily with assistance from my Department to meet the demands of their customers. People should be aware of how few growers we have left producing the indigenous fruit and vegetables we rely on in this country. If one sought commercial carrot growers, one would be lucky to see five growers who have just about been able to survive. Even that is in question in the current environment.
The main products grown include potatoes, fresh field vegetables such as cabbage, carrots, cauliflowers, broccoli, leeks, sprouts, parsnips and spinach; glasshouse crops such as tomatoes, peppers, salads and herbs; mushrooms grown in mushroom tunnels; and fruit, mainly strawberries, grown under some form of protection, and apples.
Vegetable and fruit growing is a business that is both capital and labour intensive, and we have heard about the minimum wage, which should perhaps be discussed. Like any business it must make a profit to continue or otherwise the normal business requirements of renewal and reinvestment cannot take place. As with all business, if growing for the fresh market is not viable or profitable, then it will not continue. The businesses will close and the people working in them, be they growing, harvesting, packing, delivering or whatever, will be laid off.
In addition, the Irish consumer will no longer have fresh, locally grown fruit and vegetables available in the shops and all our fresh fruit and vegetables will be imported. In many cases they would be up to a week old by the time they reach our tables. We would be completely dependent for supply on other countries, assuming we could get supplies at all. Globally, more than 100 countries are importing to meet their food needs currently. According to the Washington Population Institute, approximately 82 do not import enough to maintain a healthy population. We are considering a scenario with knock-on effects, and this is the first tremor in the action to help our indigenous fruit and vegetable industry survive. Even if far-off countries had a surplus to sell us, we would increase our carbon footprint at a time when we must reduce it to save us from catastrophic climate change. That, paradoxically, would make it more difficult to obtain the food supplies because we would be compounding the problem. It would be difficult to re-establish vegetable growing in Ireland in the event of changes taking place that disrupted our supply from other countries because in the meantime large-scale food growing skills and facilities would be lost. Deputy Mary White has a great deal of knowledge about growing different types of vegetables, as have others present, but growing to feed the needs of a supermarket needs an entirely different set of skills from those any of us attempt part time.
It is important to bear in mind that the consultation period on the code of practice comes to an end on Wednesday 30 September and follows a series of actions undertaken by the Government to bring greater transparency and balance to the grocery goods sector, including the National Consumer Agency price surveys, the Forfás report on the cost of running retail operations in Ireland and the Competition Authority study on the retail related import and distribution sector.
It is essential that any unfair or illegal practices at work in the retail grocery trade which could result in lasting damage to the sector, especially to the vulnerable fresh fruit and vegetable elements, are tackled effectively once and for all. We have made a valuable start in the publication of the consultation documents for the code of practice and must vigorously follow this up so that greater certainty and reassurance can be introduced into the relationship between suppliers and the supermarket multiples.
