I think we were all caught on the hop as we were not expecting the Adjournment Debate so early. I thank you, a Cheann Comhairle, for affording me the opportunity to speak on what I regard as a very important matter. It would be fair to say that the ordinary consumer welcomes any reduction in the price of bread or any other grocery items at any time and for that reason all of us would be slow to say that the notion of cheap bread is bad so far as the consumer is concerned. In this instance we have to look at what is happening in the whole grocery trade. While the idea of cheap bread in the short-term may be good for the consumer, if the trend continues various parts of the country could be left without a supply of bread on a daily basis simply because a number of the smaller bakeries will not be able to sustain the type of losses that are being incurred at present and will go out of business.
The reality will be that if somebody wants to buy a sliced pan the only place they will be able to get it will be from one of the multiples. I do not think that in itself is a good thing for the consumers throughout the length and breadth of the country. A balance must be achieved in relation to the price being charged and the availability of the product, and also convenience for the consumer.
What I am trying to achieve with the Minister's help is a situation where the consumer can get the best possible deal in the long-term while at the same time maintaining a viable bakery industry.
The original price war commenced in early 1989 when Dunnes Stores reduced the price of the 800 gramme sliced pan to between 35p and 39p. The then Minister for Industry and Commerce, Deputy Burke, intervened and restrained all retailers from selling below 55p. Within weeks of making that order he revoked it, declaring that the order itself had put an end to the price war. Immediately on his announcement Dunnes Stores reduced their price to 35p. The reason for withdrawing the order did not achieve the original intention and many bakeries went to the wall in 1989, the most notable being Johnston, Mooney & O'Brien and Downes. The number of bakeries selling sliced pans fell from 146 in early 1989 to approximately 70 at present.
The publicity ensuing from these closures forced the then Minister, Deputy Burke, to investigate the whole bakery area and to ask the Irish Productivity Centre to carry out an investigation into the bakery trade. Unfortunately, more than 12 months later we still have no results from that examination. The reality is that the top 12 bakeries control 80 per cent of the market. I do not think there is a bread war taking place but rather a battle between the supermarket groups, using bread as a weapon, to decide who will control the biggest slice of the market. As the multiples now either have their own bakeries or have entered into contracts with bakeries for direct supply, there is no need for salesmen to make deliveries on a daily basis to outlying areas, with the result that costs have been reduced.
It is my understanding that it costs between 26p and 27p to produce a sliced pan, with the cost of distribution standing at approximately 12p while overheads amount to about 7p, making a total of about 46p which would allow the efficient baker to break even. Therefore it would appear that it would be totally unrealistic to sell a sliced pan at 33p as is the case at present. Allowing for the fact that in certain cases a particular baker supplies all the bread with overheads being cut as a result, it is generally accepted that it costs about 46p to produce a sliced pan and break even.
If the present trend continues many bakers will go to the wall with a huge number of jobs being lost. I am afraid the Minister will only react when the first major closure is announced. Unfortunately, it will then be too late. I am surprised there has been no indication in recent weeks of what can be done to bring some sanity into the marketplace and I am more than surprised that the Minister, Deputy O'Malley, has not taken some action, such as bringing people in to discuss the matter or produce the report of the Irish Productivity Centre who were engaged last year. Of course he cannot refer the matter to the Director of Consumer Affairs and Fair Trade as we do not have one.
I issued a statement a few weeks ago in which I appealed to the Minister not to allow a gap between the departure of the previous director and the appointment of the new director, given the type of thing that is bound to happen in this area and, in the event of an emergency, we need someone to react immediately. Since, unfortunately, we do not have a Director of Consumer Affairs and Fair Trade at present, there is an obligation on the Minister to make certain that this matter is looked into, that the reports produced are examined fully and made public and that the consumer is made aware of all the circumstances surrounding this matter.
It is unfortunate that the supermarkets are using bread in an effort to get a bigger share of the grocery trade and attract more business. If more bakeries go to the wall stores in various parts of the country would be left without a proper supply of bread on a daily basis and certainly this would not be in the best interests of consumers.
The same loaf is sold in Britain at between 55p and 59p sterling. There will be a temptation to continue to use flour from the United Kingdom which will lead to more problems for the Irish flour milling industry. Most of the major bakeries deny that they use flour from the United Kingdom but I have been told that this is not the case. While they may buy some Irish flour, the bulk of the flour used is imported from the United Kingdom. It is quite easy for bakers when an investigation is carried out to say that they are using Irish flour as they are in fact using some Irish flour, but the statistics on imports from the United Kingdom prove the point. Imports are on the increase.
