Dáil Éireann Debate, Thursday - 29 June 2023
1. Deputy Louise O'Reilly asked the Minister for Enterprise, Trade and Employment if he will convene a meeting of large food companies and large food producers considering the information in the Competition and Consumer Protection Commission High-level Analysis of the Irish Grocery Retail Sector report, which outlined that profits for this sector were significantly higher than profits for supermarkets. [31678/23]
View answerFollowing the publication of the Competition and Consumer Protection Commission, CCPC, High-level Analysis of the Irish Grocery Retail Sector report, will the Minister commit to convening a meeting of large food companies and large food processors regarding possible profiteering in the sector?
The food sector falls within the remit of the Minister for Agriculture, Food and the Marine, and his Department keeps in close contact with the relevant actors in that sector. Fairness and transparency in the food sector are essential, as is ensuring that consumers have access to sufficient and accurate information before making a purchase. That is why the Minister, Deputy McConalogue, is establishing the new agrifood regulator under the Agricultural and Food Supply Chain Bill 2022. Price development along the food supply chain will form part of the remit of the new regulator. It will have two functions in this regard: a price and market analysis and reporting function and a regulatory enforcement function concerning the enforcement of prohibited unfair trading practices.
In terms of my own remit in relation to competition, I wrote to the CCPC in May requesting an assessment of competition in the grocery retail sector and whether there is evidence of excessive pricing on the part of retailers. In its report, the CCPC states that it has not seen any indications of any market failure or excessive pricing taking place in the grocery retail market. In addition, the CCPC states that there is evidence that competition has improved in recent years on the basis of price, quality, location and service and notes that this has resulted in greater choice for consumers. Of course, it is true that food prices in Ireland remain high when compared internationally. This is based on a number of factors. These relate to Ireland being a small island nation with inevitably higher costs for transport, our small market size, staffing costs and the fact that we are a significant importer of energy and food produce. As a small, open trading economy, Ireland is exposed to global inflationary pressures, including fluctuations on international markets for food, commodities and energy.
However, it is a welcome development that food inflation in Ireland is declining and as of May was at 5.4%, which is below the EU average of 7.1% and the euro area average of 6.1%. Despite our high price position, Ireland remains a competitive economy. Ireland was recently ranked as the second most competitive economy in the globe under the IMD world competitiveness rankings. Having said all that, I think we need to continue to monitor the food retail market closely. We need to understand in more detail why we continue to be a country that has higher food retail prices than most other countries in the EU, even though there are some factors that explain that. I have made it very clear to the sector that we will follow it closely. Of course, we will also work with the new regulator in its new remit.
I am on record as having welcomed the establishment of the agrifood regulator. At the beginning of March the European Central Bank highlighted that corporate profiteering was contributing to price rises, as firms are using inflation as an excuse to increase profit margins. To be clear, I am raising this issue on behalf of consumers and also on behalf of retailers and primary producers. What they are telling me is they are getting squeezed at both ends and the big food producers are in the middle. I welcome the Minister's commitment to monitor it, but what I am asking is whether the Minister will convene a meeting with the major food producers to have that discussion with them. As the Minister has said himself, the profits are not translating to the price at the till. We are in the middle of a cost-of-living crisis and people are being squeezed. Small businesses and growers in my constituency in north County Dublin will tell you that their margins are cut to the absolute bone. Yet, the ECB identified that corporate profiteering was contributing to price rises. Somebody is making money here. The consumer and the primary producers are getting squeezed. We know, thanks to the report, that there is no evidence of profiteering in the retail sector as such, but it has to be coming from somewhere. I would like to see the Minister take the lead on this. I respect the role of the agrifood regulator and Department of Agriculture, Food and the Marine, but there is a role for the Minister's Department here as well.
First, I acknowledge the role of my colleague, the Minister of State, Deputy Richmond, in terms of the retail forum. That focus on ensuring that consumers are getting a fair deal from a competitive marketplace in the retail sector continues. There will be another retail forum in early autumn and that conversation will continue. The food industry is an industry that I know reasonably well, having been Minister Agriculture, Food and the Marine previously. It is a sector, by the way, that needs to be competitive in terms of productivity and pricing because most of the food that is processed in Ireland actually gets exported and needs to find a consumer outside of Ireland. We are now exporting over €16 billion worth of food and drink. That suggests that this is a sector that needs to be competitive. However, we need to understand in more detail the different margins that are taken along the supply chain, whether that is from primary producer to processor, in terms of large food companies, or then on to retailers. I will happily speak to my colleague, the Minister for Agriculture, Food and the Marine, on this, but I think it is primarily his responsibility to deal with the food processing sector.
The French finance minister recently convened a meeting of several large food companies to discuss the price of food items and he managed to secure a pledge from firms like Unilever to cut prices. It is astonishing that it has not been done here. I think it should be done. The Minister will talk about the agrifood regulator and I have said its establishment is very welcome. However, the CCPC report highlighted that Unilever and Kerry Group reported pre-tax profit margins of 16.3% and 11.9%, respectively, in 2021. Last week's quarterly report by the Central Bank highlighted that profits contributed more to domestic inflation than wages in recent years. I respect the role of the retail forum, but there is a role here to bring these companies together. I ask again, given that the pressure was put on the retail forum and supermarkets regarding profiteering, if the Minister will commit to the forum and the public that he will convene a meeting of large food companies to discuss the potential for excessive profiteering.
What I will commit to is having a conversation with the Minister for Agriculture, Food and the Marine about what the appropriate direction here is in terms of what we should be doing together as a Government and in the context of the new regulator being set up. It is important to say that we import a lot of food from large food companies like Unilever, Nestlé and lots of others. We are a price-taker as a small, open economy that imports very large volumes of food across many products. When you speak to retailers, as I have, and talk to them about the differential in price between own-brand product and branded product, you often see a significant difference because large food companies with big brands and so on have not dropped their prices in the same way that own-brand has reduced pricing. We need to ask questions around why that is and where the profit margins are. There is an issue here, but it is primarily the remit of the Minister for Agriculture, Food and the Marine, as it was when I was in the Department. We did bring many of the companies together, for example, in the beef forum, when we did this before to understand more fully the full supply chain and how it functions.
