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Seanad Éireann debate -
Wednesday, 19 Feb 1992

Vol. 131 No. 8

Food Prices: Motion.

I move:

That Seanad Éireann condemns the failure of the Government and, in particular, the Minister for Industry and Commerce to ensure that savings made from the drop in prices paid to farmers for basic food products have been passed on to the consumers.

I thank the Minister for coming to the House but I regret she cannot stay for the debate.

This is a very appropriate time to consider this issue, as we face a reform of the Common Agricultural Policy which will result in very significant cuts in prices to farmers. It was hoped that some of the benefit of those cuts would be passed on to the consumer. The country benefits from high prices for food that is exported but the consumer benefits if there are low prices at home or, at least in theory, should benefit. The history of the past 15 years, or of the past five years, does not give me much confidence that the consumer will benefit to the extent he should. In a perfect world it could be expected that consumers would benefit in proportion to the farm share of the retail price for food. This varies from product to product but overall it is about 40 per cent. However, when trends in farm product prices and retail prices for the food products covered by the Common Agricultural Policy reform are analysed for the past five years using official CSO statistics, it is clear that the relationship between farm gate prices and consumer prices is far from perfect.

I am concerned that there appears to be an ever increasing gap between the prices which farmers receive for their produce and the prices consumers pay. This concern arises for three broad reasons. First, less and less of the consumer's pound is being passed back to the primary producers as the processing, distribution and retailing sectors increase their margins. Second, food consumers should obtain reasonable value for money and not be exploited through excessive marketing margins in the food distribution chain. Third, for many products — particularly pigmeat, liquid milk, milling wheat, potatoes and eggs — the domestic market is the most important market. For other products, such as heifer beef and lamb, the domestic market is a very significant market.

The fact that Irish farmers get the lowest prices in Europe is not reflected in the price of food to the Irish consumer. Comparision of food prices across the Community are difficult not only because of the differences in currencies but also because most countries have VAT on food at various rates while Britain and Ireland have no VAT on food. However, we can at least look at the consumer prices in Northern Ireland and England and see that they get better value on most items and the farmers there also get better prices.

The floor prices of most of our main farm products are now determined in Brussels, but substantial variations above floor prices regularly occur. When prices to our farmers increase that is reflected immediately and fully in consumer prices but when prices to the farmer drop there is a time lag in the fall of food prices, and the drop is never fully reflected. Amid all the ups and downs in prices there is one disturbing underlying trend, the proportion of what the consumer pays going to the farmer is in continual decline and the margin to the distribution chain is on the up and up.

If we take a few examples over a five year and a 15 year period, using CSO figures, it is easy to see the consumer is getting less than good value for money and the trade is taking an ever increasing margin. Comparing 1985 and 1990 we find, for instance, cattle prices were 10 per cent lower in autumn 1990 than in autumn 1985, but beef prices to the consumer were 18 per cent higher; milk prices in 1990 were 7 per cent above the 1985 level but butter and cheese prices were almost 40 per cent higher than in 1985; cereal prices were roughly the same in 1985 and 1990, yet the price of bread was roughly 25 per cent higher in 1990. If we take a 15 year timescale between 1975 and 1989, inclusive, and compare the ratio of the price the farmer received with what the consumer paid over a range of products, we find the marketing margin has increased by over 30 per cent. Let us take some examples: the meat marketing margins went up as follows: steak, 32 per cent; lamb, 46 per cent and pigmeat, 56 per cent. The marketing margin increases for other items were: liquid milk, 28 per cent; cheddar cheese, 26 per cent; butter, 11 per cent; bread, 18 per cent and eggs, 33 per cent.

The greatest rip-off of all is liquid milk sold in retail outlets. In Britain, milk sold in supermarkets is 11p (sterling) per litre cheaper than doorstep delivery. If that price difference were applied here to all the milk sold through the supermarket checkouts and other shops it would save the consumer roughly £20 million per annum. In other words, the multiples are creaming off excessive profit of the order of £20 million at the expense of the consumer. That is partly due to the behaviour of the bottlers because when Ben Dunne tried to reduce the retail price of the litre of milk the processors denied him supply, which was a rather foolish move. They did so in the belief that if too much milk was sold through supermarket outlets we would cease to have doorstep delivery and in that case it was felt that there would be a decline in the consumption of liquid milk.

The evidence for that is not at all clear. In the United States, where about 95 per cent of all milk is sold through supermarket checkouts, the decline in milk consumption is roughly the same as here. In Finland, where there is no doorstep delivery they have the highest consumption of liquid milk in the world. In Denmark, where the doorstep delivery ceased some years ago, the decline was not all what was predicted. It was partly offset, of course, by an increased purchasing at the supermarket, because of reduced prices.

The lesson from this is that we must be much more vigilant about prices. Competition is not always a sufficient safeguard, especially when the bulk of the grocery trade is handled by a very small number of companies. I know there have been price wars between these companies but they are largely phoney wars. Price cutting occurs on a very small range of products, probably three or four out of perhaps 3,000 products. Consumers are led to believe that competition is taking care of them — it is anything but that.

If we go into these figures in more detail, we discover what percentage the producer gets nowadays compared to some time ago. I will just take a small number of items. In 1975, for instance, the egg producer was getting 66.2 per cent of the purchaser's price; and by 1989 that percentage to the producer had dropped to 49.7 per cent. If we take the sliced pan, in 1975 the producer's share of the retail price was 21.9 per cent; by 1989 it was 17 per cent and by 1990 15.4 per cent. The liquid milk producer's share of the retail price of liquid milk in 1975 was 58 per cent, and by 1989 it was 45 per cent. Also in the milk sector, in 1975 the producer's share of the retail price of cheddar cheese was 59 per cent, and by 1989 it had fallen to 46 per cent.

Another way of looking at this is the retail producer price ratios. In all these the proportion going to the retailer has increased. If we compare the ratios to one cut of meat it can be misleading, so if I will take examples of different cuts over different years we find as follows: in the case of beef, round steak, the percentage increase in the ratio between 1989 and 1975 was 29 per cent but more significantly between 1975 and 1990 it was 42 per cent; for sirloin steak from 1975 to 1989 the increased percentage margin was 39 per cent and between 1975 and 1990, 53 per cent; for rib steak the ratio between 1975 and 1989 was 27 per cent and from 1975 to 1990 it was 42 per cent. On average, between 1975 and 1989, a 32 per cent increased marketing margin occurred and between 1975 and 1990, a 40 per cent increase. The same kind of analysis for lamb will show that for a whole leg of lamb the increase from 1975 to 1989 was 36 per cent and from 1975 to 1990, 53 per cent; for loin chops the figures were 59 per cent and 69 per cent and for gigot chops, 44 per cent and 48 per cent. It is in relation to pigmeat that the greatest rise took place: pork loin chops showed an increase between 1975 to 1989 of 66 per cent and from 1975 to 1990, 83 per cent; back rashers, 50 per cent and 65 per cent and ham, cooked, 51 per cent and 63 per cent, or an average between 1975 and 1989 of 56 per cent and between 1975 and 1990 of 70 per cent. The big jumps between 1975 and the latter part of the eighties is due to the fact that there was a drop in the price to the farmer which was not reflected in the price to the consumer.

I would like to summarise these changes without going into too much detail on figures. For food items covered in this analysis, the weighted average increase in the marketing margin was 32 per cent between 1975 and 1989; in the case of meat products the weighted average increase in the marketing margin in the first half of 1990 alone was 10.75 per cent. For the 15 food items analysed all but two, namely butter and potatoes, show a substantial increase in the marketing margin between 1975 and 1989, in other words, the farmers' share of the consumers pound has diminished continuously and significantly. Of the 13 food items which had an increased marketing margin, the increase in all cases was in excess of 25 per cent between 1975 and 1989. For all three sheepmeat products the increase in the marketing margin was in excess of 35 per cent and for all the pigmeat products was in excess of 50 per cent.

We must be especially careful the consumer gets the benefit of reduced prices to the farmer. The evidence to date over a period of 15 years or more would not indicate that that is likely to happen to the full extent at least. It is very important that at least the consumer sector of our society should get some benefit from reform of the Common Agricultural Policy. I formally recommend this motion to the House and urge the Minister for Industry and Commerce to be more vigilant about ensuring that the consumer benefits from any drop in farm gate prices.

I have pleasure in seconding the motion. I note the Government amendment which refers to the Culliton report. We all know the Culliton report is now at least one task force, if not several committees, away from being implemented. It was a very interesting report and much useful research and data has gone into compiling it. In the budget passed since the Culliton report was published, it would appear that the main issues, particularly in relation to tax reform and redistribution, were not tackled.

Many groups are concerned that the continuing fall in farm gate prices is not reflected on the supermarket grocery shelves. When we talk about the consumer we are talking primarily about the housewife. She is not getting any extra value for her pound even though the farming community and farmers generally are being decimated mainly because of reforms to the Common Agricultural Policy. We all accept that reforms are badly needed, and in many cases overdue, and we will be looking for compensation in other areas to see our farmers through, but there will be very little benefit if farmers and consumers are to suffer as a result of resolving the problem. In other countries the farmers loss was effectively the consumers gain. We have not managed to get to that position in this country.

If we want to resolve this problem we can either look to price control or we can talk about increased competition. There is no other way we can go. I would not support restoration of price controls. Deputy John Bruton some years ago removed price controls in many areas. They usually mean higher prices to the consumer, even though the impression might be given that they could mean lower prices. Price controls are not an option so we are now looking to competition and we must ensure we have a fair competitive environment in the retail sector. Progress has been made in this area.

The Competition Act was referred to in the Government amendment. A great deal of work appears to be needed on the ground before the consumer or housewife, benefits from the difficulties being experienced in the farming sector with farm gate prices. I would like to hear from the Minister how there could be greater competition in the retail sector so that consumers could benefit. That is, effectively, what this motion is about and I cannot see the Government opposing it. It is a very serious motion but not one on which we need to divide politically. We all want to see the consumer benefit if the farmers and the agricultural sector must suffer because of reforms in the agricultural policy area generally. There is no point in both sides losing out.

If we go on to consider the problems that GATT might bring to the agricultural sector we could be here all night. I made the point that further sacrifices will be needed from the agricultural sector if the GATT talks are to be finalised. I hope they will be finalised because we have more to lose if there is no agreement than we would lose from a reasonable policy, particularly, in the area of agricultural trade and world trade.

I will not try to compete with Professor Raftery's excellent statistics, but I will give a few examples that have frustrated me over the years, particularly in researching the topic we are discussing here tonight. From August 1989 to August 1991 there was enormous decline in incomes for the farming community and a great decrease in the prices being received at farm gate. The price for a 350 kg. heifer declined by 19 per cent in that time. At the same time there was only a 5 per cent decrease in the price of round steak, a 6 per cent decrease in the price of rib steak, a 3 per cent decrease in brisket and a 4 per cent decrease in sirloin steak. With an average of a 5 per cent decrease in the price of the different cuts of meat to the consumer, the farmer had to take a 20 per cent decrease in the farm gate price.

The same situation applies to the pig sector. In fact, the greatest anomalies arise in that sector. There was a 30 per cent decrease in the price of a 25-34 kg. pig in the same two year period. I know it was a two-year period of a particular decline in the price of agricultural commodities but pig prices went down 30 per cent and pig meat, in the form of pork steak, went up 2 per cent. Loin pork went up 7 per cent, ham went up 7 per cent, back rashers went up 10 per cent, streaky rashers went up 14 per cent and sausages went up 7 per cent, all this in the two year period during which the price of pigs collapsed by 30 per cent. I know these are simplistic figures, but I say to the Minister there is no way the price of sausages should increase by 7 per cent while pig prices declined by 30 per cent in a two year period. I am looking to the Minister for the answers because I do not have them.

The lack of meat in the sausages.

It is not really the lack of meat in the sausages. Why then would streaky rashers which are pure pig, albeit after a bit of treatment, go up 14 per cent when the price of pigmeat declined by 30 per cent?

In September 1990 the IFA expressed their concern because they recognised that the farmer suffered and that the consumer did not gain. Their concern arose for three reasons. First, they are concerned that less and less of the consumer's pound is being passed back to primary producers as the processing, distribution and retailing sectors increase their margin. There is more sophistication in the food distribution chain generally and it is equipped with technology and so on. I ask the Minister to look at this because the consumer deserves to be looked after. Secondly, the IFA are concerned to ensure that consumers obtain reasonable value for money and are not exploited through excessive marketing margins in the food distribution chain. Thirdly, the IFA are conscious that consumption levels in the domestic market can be increased, and this is most important. Farmers could benefit if consumers got cheaper prices because it would increase consumption levels in the domestic market, particularly at times when producer prices are under downward pressure due to external forces, namely, the Common Agricultural Policy and GATT regime.

I ask the Minister to ensure there is fair competition in the retail environment and to look carefully at the big supermarkets and the multinationals. I think they are under the microscope and there is not a lot they do that is not picked up fairly quickly by the media and by consumer lobbies generally. There is advertising and packaging. There are so many areas between the consumer and the producer, namely, the farmer in this case, that appear to be absorbing more and more of the margin that should be passed on to the consumer. Butchers will say that when there is an increase in the price of the raw material to them from the farm gate they do not increase the price of the various cuts pro rata. They will then use that as a defence when they fail to reduce prices.

In relation to pigmeat, in particular, there can be no justification for increasing prices at a time when there is a 30 per cent decrease in the basic commodity price to the farmer. My colleague, Senator Raftery, gave details of the producer's share of the retail price decline in sliced pans and liquid milk. These areas require urgent attention as those two products form the basic stable diet of many.

This is an important motion and I urge all sides to support it. We are trying to ensure that the consumer gets the best possible deal, particularly at a time when our farmers are not getting the price for their products that many of us would like. I welcome the Minister in her new capacity. Last week I spoke about my disappointment, particularly as the Taoiseach said he was appointing people to the Cabinet on merit, that the Minister was overlooked. Apart from our political differences, and there are many, I recognise merit too, and believe that she should be part of the full Cabinet, but sin scéil eile, as they say.

An Leas-Chathaoirleach

I join Senator Doyle in welcoming the Minister to the House in her new role and wish her every good luck.

I thank Senators for their warm welcome. It is fortunate that Senator Doyle welcomed me because it is in my script to thank Senators for their warm welcome. I am always glad to come to the Seanad and listen and respond to the many points put forward. My tenure in Health was so brief that I did not have an opportunity to come here as Minister. However, I have entered a new field which has many complexities and difficulties and I welcome the opportunity to come here and listen to this important and interesting debate.

I thank Senators Raftery and Doyle and the other Senators who will not speak today but whose comments will be reported to me. A Fianna Fáil colleague will move an amendment to this motion and both sides will be able to express many viewpoints, not necessarily in an adversarial fashion because, as Senator Doyle rightly said, these issues are of everyday interest. The woman or man in the street has a deep interest in this issue and wants to know why the reduction in producer prices has not benefited them.

Some of the points raised do not directly impinge on my responsibilities but are the responsibility of another Department. However, I am pleased to come here. I am aware that the Irish Farmers' Association published reports on this subject in 1990 and 1991. The first report claimed that consumer expenditure on food had fallen by one-third and concluded that there was an ever widening gap between prices received by farmers for their farm products and prices paid by consumers for food. In summary, that report concluded that reductions in producer prices had been converted into and increased marketing margin rather than lower prices for consumers and better returns to producers. There were many interesting individual findings in that report, but the House will be aware that responsibility for the food sector lies with the Minister for Agriculture and Food. However, I am here to answer for the Government.

The August 1991 IFA report, which dealt with pig prices, claimed that less consumer expenditure had been passed back to the primary producer as the processor, wholesaler and retailer continued to increase their margins. Again, the woman and man in the street are the losers. The association were concerned as indeed I am, that consumers receive reasonable value for money, without excess margins being absorbed along the chain between the producer and the consumer. A noticeable conclusion of the report was that it was not possible for the IFA to identify with accuracy which link or links in the chain were taking these excessive profit margins.

The Director of Consumer Affairs and Fair Trade met a delegation from the IFA last October and indicated that certain aspects of retail pricing still came under his remit. I am told he is continuing that investigation and he or his staff visit pig meat processing plants, retailers and trade associations and obtain documentary evidence from these sources. I will be asking why it takes so long to find out where the buck should stop and where the profit margin is being absorbed. I am aware that among the principal reasons for the upward trend in inflation last year was the robust recovery in food prices which, in the earlier part of the year, had exerted a significant restraining influence on inflation.

The food industry is of great importance in the Irish economy, accounting for 10.5 per cent of gross domestic product, 14.5 per cent of employment and 25 per cent of exports. It is important to put the situation in perspective. In January 1986 the then Government decided that major new measures to promote competition and efficiency were required. Senator Doyle clearly recognises that fact but I want to acquaint the House.

It was decided that detailed price control arrangements should lapse. This, it was felt, would give rise to cost savings. Arising from the decision the National Prices Commission were disbanded and the priceline offices were closed. The powers of the Minister to impose price control were continued, as were the requirements in relation to display prices, including certain food products.

These arrangements were a follow on to the progressive decontrol of prices since 1975 when detailed control on most manufacturers, other than dominant firms, was removed. The then Minister, Deputy Bruton, said:

I believe that our economy can only succeed internationally, in exporting and attracting tourists, if our costs are cut back. This is vital also for our own consumers. The best way to achieve this is through the promotion and enforcement of competition rather than by administrative rules.

Under the Programme for Economic and Social Progress the House will be aware that the Competition Act, 1991 was brought into force on 1 October 1991 and will have far reaching implications for every business in this country. This innovative legislation which is based on Articles 85 and 86 of the Treaty of Rome, introduces at domestic level the basic competition rules that already applied to intra-Community trade and brings Irish competition legislation into line with that of our European partners. It deals comprehensively with anti-competitive behaviour in all its guises. Furthermore, it allows those most adversely affected by the anti-competitive activities of others direct recourse to the courts to seek injunctive relief or damages. The Act sets down the legal framework which is necessary to protect the market and to promote the principles of free and fair competition on which the market operates. Ultimately it will give tangible benefits and bring the sharp blast of competition into the basket of each consumer.

As the Act only became law last October this is a short time in which to have its provisions put into effect and for the general consumer body to be aware of the recourse to law which they now have. This area should be constantly monitored to ensure that consumers know their rights, that it is being effectively handled, and that tangible benefits will flow from it. There is no point having a good Bill bringing into play the necessary competitive elements and allowing the consumer recourse to law if there is not a follow on. I will certainly deal with that matter. I cannot exaggerate the importance of competition. It is vital for economic development and I am sure we all agree on that.

The House will be aware that the Restrictive Practices (Groceries) Order, 1987, which came into force in December 1987 relates to competition and restrictive practices in the groceries sector. Senator Raftery has already dealt with that. The order contains a prohibition on below cost selling of groceries — below net invoice price — and also deals with the issue of "hello money". Issues which have arisen from that seem to be specifically about a particular commodity which is highlighted on the day, and what we have been discussing here, does not assume the same status.

Products particularly liable to deterioration, such as fresh fruit and vegetables, meat and fish, are excluded from the ban on below cost selling, on the recommendations of the then Fair Trade Commission who carried out a formal review of that order. The Minister for Industry and Commerce received a copy of that review and the report was published two months ago.

In view of the fact that the Competitions Act only recently came into force and in order to give interested parties an opportunity to study the Commission's report, the question of retention of the Groceries Order is being kept under review. It is important to stress that while it is easy to suggest direct Government intervention in the food area with the objective of reducing consumer prices, there are historical and practical reasons which indicate that this solution is, in practice, inoperable. The House will be aware that when price control was in operation prices for meat products, cheese and eggs are monitored but never controlled. In the case of butter, bread and potatoes, maximum prices were set by the National Prices Commission but such controls were abolished progressively with the winding down of the commission. Potato control was limited to the Dublin area, and meat products were controlled because of administrative difficulties associated with controlling a wide range of non-uniform products. Moreover Members will be aware that statutory responsibility for price control on milk was delegated to the then Minister for Agriculture and Food by the Government in July 1986.

I am sure the House is aware that the Government have recently established a task force to follow up the implementation of the recommendations set out in the Culliton report. That report is most welcome. On my first day in my new office I read it and many of the submissions. It is a very interesting and forward looking document. I dispute with Senator Doyle that the task force is now one remove from the implementation of Culliton. The concluding recommendation of Culliton was that there would be such a task force which would be speedily set up, would report to the Taoiseach and would have a remit to proceed with celerity in the carrying out of what they would find from their recommendations. I assure Senators that the report, if followed through in its various recommendations, will have enormous effects on society in general, particularly on jobs opportunities, training and marketing, education and all the things which will lead to the creation of jobs.

The report notes that the food industry is by far the most important component of the indigenous sector of Irish industry. One of the key characteristics of the sector is that it accounts for almost one-third of the gross output of all manufacturing industry in Ireland, with the Irish-owned sector of the food industry accounting for over half the gross output of all Irish owned industry.

The Irish food industry remains primarily producer rather than consumer driven. Because farm production of dairy and beef products is far in excess of home consumption, this is understandable. Nevertheless, the two other major surplus producers in the EC — Holland and Denmark — have developed a stronger consumer orientation within their agricultural industry. In contrast Irish agriculture remains more dependent on the intervention mechanism than other member states. Coming events are already casting their shadows in that regard. That has already been spoken about here. Furthermore, imports of processed foods are rising more quickly than exports as Irish manufacturers lose their share of the domestic market.

Among the main forces that will determine the development of the Irish food industry over the next ten years and beyond are the growing concentration of food sales in the retail multiples, the development of scale in the processing sector, changing consumer tastes and the degree to which producers, manufacturers and retailers recognise these issues and work closely together. The Culliton report noted that many of its recommendations had been made before. The problem has been that cohesive action programmes have not followed the recommendations. The reasons for this have been twofold: difference of interest, with vested interests having their say and saying it loudly enough for it to be swallowed, and the fragmentation of the State policy formulation and support system for the food industry which involves four Cabinet Ministers, five Ministers of State, four Government Departments and ten State-sponsored bodies. It is mind boggling to read and note that.

The report concludes that arrangements for marketing farm produce need to be streamlined. Priority should be given to identifying and satisfying customer needs and sharp practices in the food industry which undermines the consumer perception of Irish food products should be eliminated. If the food industry is to respond to the fundamental changes now under way in both the market-place and the intervention system, a new approach is required.

The report recommended, inter alia, that overall responsibility for the formulation of a national food policy should be allocated to one Department. Given the breadth of the food industry, its strong and necessary linkages with agriculture and the critical role of FEOGA funds in the development of the industry, it would seem, on balance, that the responsibility for national food policy should reside with the Minister for Agriculture and Food. In making this recommendation the group recognises that there is a strong perception that the Department of Agriculture and Food have in the past been over-influenced by the interests solely of farmers and commodity producers. The report states that a more balanced approach is required, particularly in the light of the reforms and changes now under way, that an expert group, comprising farmers, manufacturers and retailers should be asked to prepare, in co-operation with the State sector, and within six months, a national food development plan. I have highlighted certain areas that indicate a non-consumer outlook by the food industry. The report is strong on the need of the industry to come to grips with this critical failing.

I conclude by advising consumers to vigorously exercise their rights. When shopping, they should find out the price of the food product they are purchasing. If they feel unhappy with the price quoted, they should check it out in other shops and purchase where they give value for money. This is as Senator Doyle calls it, mother's milk talk. This is difficult for the consumer in the supermarket or in the butcher's shop where she is in a rush doing many things in a very short time. In theory, it is fine to start with a notebook and pencil and note prices. However, running to various telephone boxes and ringing up firms to complain is not practical. When the changes in the competition legislation become known, consumers will learn there are ways they can get their rights. They should not feel that the Government will get them value for money only by employing an army of inspectors. That is not the way to go about it, but there is a way of interpreting Acts and Bills to render them applicable to consumers. As suggested in the Culliton report, focusing on one Department rather than the many agencies which are involved at present would be very effective.

The approach adopted by the Oireachtas, proposed by the Minister for Industry and Commerce is, rightly, directed at strengthening legislation in the competition field which, coupled with action by purchasers at the counter, will reduce any excessive retail margins in sectors where such exist.

It has been educative for me to come here and listen to what has been said. I will follow the rest of the debate through my colleague, Deputy M. Ahern, who will be joining us shortly. Perhaps I will be able to come here again next week. There are areas which can be developed and I will endeavour to do that.

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"notes the enactment by the Oireachtas of the Competition Act, 1991, commends the Minister for Industry and Commerce on the speedy commencement of the Act in October, 1991, and further notes the important proposals in the Culliton report on the development of food industry.".

It is difficult to understand how the movers of the motion could be so out of touch with reality. I come from a part of the country, Donegal, where one would not expect there would be competition but prices have never been as keen as they are at present. Because I come from a Border county I am very aware of prices. This subject is actively discussed and comparisons made regularly. A basket of food which costs £64 in Donegal will cost £78 in the North, and these prices are fairly accurate. That is a complete turnaround and is an argument for the removal of price control. This is very welcome and anyone who questions those figures can go to Donegal and see the large number of shoppers who come from the North to get better value for money. Today all over the country there is active competition in the retail selling of consumer products such as bread, bacon, milk, etc.

I compliment the Minister and the Government for encouraging competition and letting prices find their own level. Recently we had a milk price increase and the creameries objected on behalf of the producers, not the retailers. The creameries refused to supply the retailers because they were selling the milk too cheaply. In County Donegal one creamery refused to supply a large multiple store but a small creamery agreed to supply it. That is proof that there is sufficient competition in the retail trade to make price control totally unnecessary. The improvement in prices in County Donegal was so great that I wrote to Gay Byrne giving price comparisons. I asked him to inform his listeners that products were substantially cheaper in County Donegal but he did not respond.

Because of the strike.

An Leas-Chathaoirleach

We should not name people in the House who are not here to defend themselves.

I will take the Minister's advice and will move to another topic.

While in Germany last week I bought a cup of tea and a cake which cost me £5 and I thought that Ireland is not such a bad country at all as it would have cost about £1 here. We enjoy being critical of ourselves, our traders and our retailers. The market scene here is changing. Small bakeries are closing down because of competition from larger bakeries. The distribution practice has changed and I am not aware of any town where active competition does not exist. One can buy most food products in the shops from 8 a.m. until 12 midnight, and that service is there because there is keen competition. It would be wrong to interfere any further with price control.

Recently I saw a notice advertising potatoes below the market price. I pointed out to the retailer, that he was marking down the price of those potatoes which would mean a loss to the producer. The retailer was tempted to display cheap prices for potatoes outside the door and so force the price down. This is proof that the motion is wrong in suggesting that the consumer is paying a high price while the producer is getting a low one. The contrary is my experience. I believe we charge reasonable prices. In my experience a pound of sausages costs from about 35p to £1.35. How, then, can anyone honestly say that sausages are too dear? The same applies to bacon. You can get a pound of bacon for about £1.25 to £2.50. There is a great difference between the price of centre back and streaky bacon and most housewives know the price depends on the quality and the cut. Most housewives are aware of the price of particular cuts of meat. Nobody is confined to one shop and everyone is aware of the prices in other shops.

As I said the prices here are very favourable and producers must be aware that they will be competing in Europe when selling milk, bacon, beef or vegetables. The producer will be aware of the retail price and he will not deliver and sell products if he is getting a bad price while the retailer is making substantial profits.

The travelling shop has not yet disappeared; there are travelling butchers, travelling grocers, people selling clothes, etc. If he wishes the producer is entitled to sell his products on a house-to-house basis and bypass the retailer.

Competition is healthy. Food producers should be aware of continuing competition and the necessity to pack and grade potatoes, vegetables, etc. in such a way that all the products are fit for consumption. We can no longer produce and package food that is non-saleable.

We have come a long way and I am pleased the Republic is now competing very favourably with producers outside the State. As I live close to the Border I can compare prices in the North with those in the South. It is right that we should recognise the tremendous work being done by our producers in producing better labelled, better packed and better graded goods.

This country has come a long way in the past 20 years. I compliment the Government on their sensible handling of price controls, although the Minister for Industry and Commerce had to threaten certain sections of the retail trade in this regard. I have moved the amendment and I ask Members to take a sensible view of the matter and to realise that there is no lack of competition here today. I hope we will continue to see more competition. The general public are very much aware that they get what they pay for. Senator Doyle gave Deputy John Bruton credit for introducing price controls but I thought he was renowned for putting VAT on children's clothes. The less Government interference there is in the market the better. It is no longer necessary for the Government to interfere. I am pleased that this matter was raised and that the public are well aware of the situation.

The message contained in this motion is very telling. Over the years we have seen a massive decline in farmers' incomes. Yet at the same time and in spite of the fact that certain figures are given for inflation, the housewife will state categorically that her shopping basket costs a great deal more than it did.

The motion states that Seanad Éireann condemns the failure of the Government and, in particular the Minister for Industry and Commerce to ensure that savings made from the drop in prices paid to farmers for basic food products are passed on to consumers.

Let us look at the price of meat. For many families meat is now a luxury yet, in real terms, we have not seen any increase in meat prices for farmers.

Anyone familiar with the trade will acknowledge that beef for the home market is essentially heifer beef. Such beef realises less than it did five, six or seven years ago. The raw material — the live animal — is making marginally more now than in the previous four or five years. I said "marginally more" because in real terms, the price has gone down. The same applies to other areas, for example, milk and bread produced from Irish wheat.

There are many areas where one could prove that price reductions have not been passed on to the consumer. The best example is cuts of beef which have increased dramatically in price over the past number of years despite the fact that the price paid for cattle has not increased proportionately. A clear example is where people kill an animal and put it into a deep freeze. They are conscious of the significant saving they make by not buying meat in a butcher's shop week after week. It is not economically possible for many people to do that but it illustrates the point I am making.

I referred to milk, but there are other dairy products where, regrettably, the Irish housewife has not benefited from the price reduction in real terms. I emphasise "real terms" because somebody might say the actual price of milk is higher, and I acknowledge that because, of course it is, but having regard to the cost of production and so on, prices have not increased. It is regrettable that the loss suffered by the Irish farmer has not been passed on in reduced prices to the housewife.

There is a big division between rural and urban communities. Both sides can be wrong from time to time. Farmers and primary producers are of the erroneous view that the non-farming community are doing very well and that those in jobs are all very comfortably off. We know that not all those who are fortunate enough to have jobs are doing very well, some of them barely eke out an existence. If these saving were passed on to the housewife it might not be as necessary for her to go out to work to meet such day to day living expenses as mortgage repayments, etc.

It would help enormously if some mechanism were established where price reductions for agricultural produce were relayed directly to the consumer. Many farmers believe that the non-farming community are doing extremely well and vice versa. The Government have a responsibility to ensure that the cost of living is kept to a minimum which, in turn, will have a big effect on the structure of wages and salaries. Apart from that, it is vital that price reductions suffered by the producer are passed on directly to the consumer.

The situation will become more serious for the primary producer in the context of the Common Agricultural Policy and GATT. We will have free trade prior to the year 2000 when we will be fully integrated into Europe and will no longer have any support systems. For that reason, it is imperative that the Government use their influence. I acknowledge that many decisions are taken on these and related matters in Brussels or Strasbourg. The Government should ensure that a mechanism is put in place which would pass on any savings to the consumer.

I mentioned the question of better understanding. I do not think that can be over-emphasised because we are a small island with a small population. It is scandalous in the extreme to think that there are such divisions in attitude and opinion among our population.

I second the amendment and note the importance of the Culliton report. I am surprised at the motion put down by my colleagues on the other side of the House.

I welcome the Minister. This is his first visit to the Seanad in his capacity as Minister of State and I congratulate him on his appointment.

In those modern times competition is the life of trade, I support my colleague, Senator McGowan's comments about Donegal. We have the same values in County Kerry but things seems to be very different where Senators Raftery and Doyle live. Some of Senator McGowan's remarks were quite interesting, particularly the fact that a shopping basket of goods in Donegal is far more competitive than in the North of Ireland. I remember some years ago bus loads of people went across the Border to shop. It is nice to see our friends from the North shopping in the Republic where they can get value for money.

One would think from the statistics quoted by Senator Raftery and Doyle that the price of beef, cattle, sheep, pigs and chicken had gone through the roof and that one would not be able to afford to buy them. When I was young I was lucky if I had meat once a week. Now my children have a choice of chicken, beef, lamb, pork etc. They can afford to buy whatever they want.

The Senator must never have killed a pig.

We often did that. I am a little concerned about the motion which seeks to ensure that the savings made from the drop in prices paid to the farmer for basic food products are passed back to the consumer. They forget about the middlemen and the workers who get an annual wage increase of 3 or 4 per cent. They forget about the cost of implementing hygiene regulations in abattoirs, for example, to bring them up to modern standards and ensure that the consumer gets a clean product.

As regards prices, I remember some years ago one could pay £50, £60 or £70 for a lamb. At present, one can walk into a butcher shop and buy a full lamb for £29, £30 or £31. If one big supermarket reduces the price on one item of food all the others follow and the consumer benefits.

I lived in the United States for a number of years and when the price of beef increased in the supermarkets the women decided not to buy beef for a week or two. The price of beef was not long dropping because there was fear that it might be left in the stores. If the middlemen were trying to make a quick profit they were put in their place. Housewives have control, no matter what product is put on the shelves. If they feel they are not getting value for money and do not buy the product for a short period it will not be long coming down in price.

Potatoes, carrots, parsnips, onions and all the excellent foods we produce are very competitive and prices have not moved all that much in the past number of years. I am quite friendly with one of the biggest potato producers in County Kerry and he told me that it costs him almost as much to grow the protatoes as he gets for them. I remember a time when potatoes cost £16, £17 and £18 for a four stone bag. One can buy them today for £5 or £6; even in the height of the season one can buy them for as little as £3.50 or £4.

One would think from the motion that the price of beef, lamb and pork had gone through the roof. I admit that farmers have taken a hammering over the past numbers of years but there were reasons for that. Farmers received huge prices for cattle thanks to the Government securing markets outside the European Community in places like Libya, Iran and Iraq, and as a result of the price paid for calves on the hoof in the Italian market and so forth. They got hugely inflated prices but now everything has settled down. I am quite sure that farmers in the future will get an increase in earnings just as everyone else does, taking the rate of inflation into account.

I congratulate the Department of Health for improving the standard of hygiene in abattoirs. The consumer should exercise their rights in this area. If they feel a product is over-priced they should shop around and go to the supermarket that is selling it at a reduced price. If they tell their friends that is the place to buy, I am quite sure all the other shops and stores in the area will reduce their price also. People like to get value for money today no matter what the product, be it potatoes, vegetables or meat products. I do not see any difference in prices in my part of the country over the past five or six years. As a matter of fact, many prices have been reduced. The consumer should be vigilant and shop around. If a supermarket is selling a product at a reduced price I am quite sure all the other supermarkets will not be long following suit.

I am pleased to support the motion and am surprised that Senator Kiely believes that the price of food is cheap in this country. The price of food is quite expensive as anybody who has to shop knows.

It is cheaper in Kerry.

Perhaps it is. As a result, the consumption of food has dropped over the past four years. Irish farmers at present receive the lowest prices of any farmers in Europe but this is not reflected in prices to the consumer.

I am surprised Senator Kiely believes that the income of farmers over the next number of years will increase. He must not be aware of the current GATT negotiations or the proposed reform of the Common Agricultural Policy and the impact that will have on their incomes. The discussions in Europe represent the commencement of the future dismantling of the present Common Agricultural Policy and the GATT negotiations are a prelude to further reductions and changes in the international food market which will result in a reduction of prices to the Irish farmer and not an increase as Senator Kiely suggests.

When prices paid to farmers increased, as they did in the past especially when we entered the EC, the price of food in the stores increased accordingly. There was an automatic follow-on to the consumer but when the reverse happens and the price paid to the farmer drops there is not a consequent reduction in the price to the consumer. This motion is to highlight that and to point out to the people that they should be vigilant and that the Government should be concerned about the situation.

The Minister's contribution to this debate was very encouraging, open and constructive and I was surprised at the subsequent discussion and contributions from colleagues on that side of the House. I congratulate the Minister on her openness to the motion and on her commitment to learn the subject. She is new to the office. I also wish to congratulate the Minister for State, Deputy M. Ahern, on his promotion. I know he has considerable ability and will do a good job. I appreciate he needs some time to read his brief. That is only natural but I know he will do a good job. I am surprised at the approach of my colleagues opposite which is in total contrast to that of the Minister who gave an excellent, open, constructive and concerned response to the motion with regard to the change in prices.

Milk prices in 1990 were 7 per cent above 1985 levels but butter and cheese prices were almost 40 per cent higher than in 1985. I am not one for statistics but those figures outline the situation in stark detail. Senator Kiely was rightly concerned about proper pay increases for people working in supermarkets. I ask if they receive proper payment at all. However, I will expand this point later.

Debate adjourned.

When is it proposed to sit again?

It is proposed to sit at 10.30 a.m. tomorrow.

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