JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Tuesday, 27 Apr 2010

Food Supply Chain: Discussion with Irish Farmers Association.

Chairman

I welcome Mr. John Bryan, president of the Irish Farmers Association, Mr. Pat Smith, general secretary, and Ms Elaine Farrell, retail liaison executive, from whom we receive plenty of correspondence in her various guises, some of which is very helpful.

Before we begin I draw witnesses' attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I invite Mr. John Bryan to make his presentation. This is his first time to appear before the committee.

Mr. John Bryan

I thank the Chairman and members of the committee for the opportunity to address the committee. As the Chairman said, this is my first time to appear before the committee. I hope we will return to the committee again.

In February, the IFA launched a major new strategy at Irish and EU level to tackle the issue of retailers forcing farm gate prices below the cost of production. The IFA publication Equity for Farmers in the Food Supply Chain shows that farmers producing everyday food products are on average getting just one-third of the final retail price. This is not sustainable for producers, or in the interests of consumers, and must be addressed through effective regulation of the food supply chain.

For the agri-food sector to realise its growth potential and contribute to economic recovery, farmers who comprise the essential productive base of the sector must have a reasonable prospect of achieving viable incomes. In 2009, average farm incomes were just €13,000, one-third of the average industrial wage, while the average incomes of full-time farmers was just €16,000. Over the past two years, the decline in farm incomes, in money terms, is a massive 38%. National farm income has fallen substantially during the past two decades, with income since 1995 down by almost 50% when adjusted for inflation. In contrast, it is estimated that Tesco Ireland made profits of €275 million last year. This is based on its target operating profit margin of 9.5%. The prices paid to farmers since the removal of price supports through CAP reform have been far below general price increases, and in some cases have fallen.

Analysis of CSO data shows that between 1995 and 2009 overall farm product prices fell by 7%, food prices for the consumer rose by 36%, and the average increase for all items in the consumer price index was 46%. While farm product prices have borne no relation to general inflation, farmers have had to contend with significant inflation in their production costs over which they have no control. Since 1995 farm input prices have risen by more than 53%.

The largest proportion of the costs incurred in bringing food to the consumer, including time, labour, investment and other input costs are borne by the farmer. The farmer's share of the retail price has declined significantly in the major commodities during the past 15 years. Since 1995, the farmer's share of the retail price for liquid milk has declined from 42% to 33%. For cheese, the farmer's share has fallen from 34% to 20%, for pigmeat from 51% to 27%, and for beef from 60% to 50%.

Full details of the farmer's share of the retail price received in 2009 can be seen in Appendix 1 to this presentation and can be found in the IFA's publication Equity for Farmers in the Food Supply Chain circulated to all committee members.

The clear message to retailers, processors, Government and the EU is that the food supply chain is broken because farm families cannot survive on prices below the cost of production. Farmers are the ultimate price takers at the opposite end of the food supply chain from powerful retailers, which are dictating uneconomic price levels to producers.

I draw to the attention of committee members a table which shows the farm gate prices and the break-even prices required. The IFA study shows that an average increase of little more than 5% in the farmer's share of the current retail price would provide producers with a viable income. I will not go through the details of the table. It is provided with this presentation.

Retailers, processors and food suppliers, in addition to providing real value to consumers, must ensure that primary producers are treated fairly. The evidence shows clearly that this is not happening. The Government and the EU Commission must address this market failure in the food supply chain by new regulation and the proper enforcement of existing competition law to tackle anti-competitive conduct. The new statutory code of practice promised by the Government must enshrine the principle of fair trade for farmers in the grocery trade by providing a means for the more equitable share-out of the consumer price across the food chain. The Government had moved to appoint a facilitator to draft this code. Mr. David Byrne had to withdraw because of a potential conflict of interest. It is important that the Government announces a new facilitator without delay to progress this matter.

The IFA has specific proposals for the code including the banning of hello money, pay to play money, below-cost selling and forcing suppliers to fund discounting campaigns. We also want the compulsory disclosure of retailers' profitability in their Irish operations. The code of practice must discourage retailers from undermining branded products with the use of own brands. To police the code and investigate complaints, the Government must legislate for an independent ombudsman, who would have the power to demand information from retailers while maintaining the anonymity and confidentiality of suppliers who make complaints.

The retailers are in danger of destroying the benefits to consumers of a secure supply of Irish and European food. Irish farmers are proud to produce food in an environmentally sustainable way, to the highest standards of traceability, quality, safety and animal welfare, in the world.

The Government must close the loopholes in the labelling legislation, which are misleading consumers and short-changing producers. I do not propose to go into details in this area, of which committee members are aware. The overriding principle is as follows. Food labelling must, first, serve consumers by upholding their right to clear information on the origin of product and, second, it must safeguard producers by ensuring transparency and fair competition from imported product.

Later this afternoon I will meet the Minister of State with responsibility for horticulture, Deputy Ciarán Cuffe, with producers from that sector. This sector is under particular pressure from the retail sector and will not survive the price war if the Government does not take action.

Recent media reports of major expansion plans by supermarkets provide clear evidence that supermarkets are the clear winner in the retail price war. I call on the committee to investigate the expansion in grocery retail space over the past decade and compare with population growth and requirements. The over capacity of the sector is self-evident and returns to the primary producer are being forced down to pay for the excess capacity.

I strongly question the wisdom of local authorities giving permission for more retail developments when there is already serious over capacity countrywide, and many small shops and convenience stores are struggling to compete as the multiples dominate and expand unabated.

The Government and the EU Commission must accelerate their plans to regulate the sector as the multiples are sapping ever more profit out of the food supply chain. Farm families are being driven to the wall as a result. I call on the Government to send a strong message to local authorities to put a stop on any further planning permission for retail outlets until the code of practice is put in place. It is important that the committee gives a strong lead. There has been much discussion about regulating the retail sector during recent years. It is time for action. I realise the Chairman has taken a strong stance on this issue in the past. We would appreciate his assistance in giving clear guidance to the Government.

Chairman

We set up a sub-committee for which Deputy Cyprian Brady, our Vice Chairman, was rapporteur and convenor. He brought forward a report recently.

Deputy Cyprian Brady

I welcome the delegation from the IFA. As the Chairman said, the joint committee invested time in considering this issue. I will make a number of points. When we began the process of trying to examine the area, what struck us was the reluctance of those involved in the industry to go public. As a direct result, the joint commission decided to commission a report on the relationship between the suppliers and the retailers. What we found was that only seven of the 50 suppliers that were contacted would go on record and then only on the basis of total confidentiality. Neither the chairman, I nor any other member of the committee know who was contacted. The two main issues arising from the report are, first, that consumers are paying too high a price for their products and second, that inefficiencies in the supply chain are mainly caused by retailers retaining profit margins which are three times greater than those in other countries.

I very much welcome the IFA's support because one of the main recommendations of our report is that a statutory code of practice must be put in place. The report went directly to the Minister with responsibility for this area and to the Competition Authority who have a direct role in this matter.

Deputy Arthur Morgan

I too welcome the president of the IFA and his colleagues and I thank him for the comprehensive overview of the situation. We are quite familiar with the retail code of practice in the food supply chain because of Deputy Brady's report which I think pulled no punches and laid out the position exactly as it was. It is unfortunate that so few people were prepared to come forward, but we both know the reason was that these suppliers were terrified. Whatever turnover they can generate to try to keep the operation standing is difficult, but if they are seen to talk in public, we all know what the consequences would be. The strength of the retailers is a worry to everybody.

I met several farmers last week and one knocked me back for ten when he said that farmers feel that they are being haunted by everybody, by the retailers and by the over-burden of regulation. I agreed with him that most other European states will look for a derogation on this, that and the other, but in this State we seem to embrace everything with such enthusiasm that it nails everybody to the ground. I know of that from the seafood industry. Farmers feel they are badly done by. Under the new REP scheme, they had to plant hedges up on a part of the hills where they knew the hedge simply would not grow. This was in Sligo. They felt it was a crazy idea. One woman gave an example that on her journey from Dublin she met two articulated lorries from Strathroy Dairy heading up with milk to Donegal. County Donegal has a substantial number of dairy farmers and I am sure they would be well able to supply that market, but the message to me was that this action by the multiples was a way of putting manners on and driving down prices for Irish farmers. They are happy to go to extra expense in the shorter-term to achieve the longer term objective to beat down prices. When it comes to retail, the code of practice will not be the answer. Farmers and those in rural Ireland are engaged in a long war with retailers. I know that many farmers cannot hold out for a long war, so we have to ensure that the code of practice is as realistic as it possibly can be.

The agri-food report is ready for publication and will be launched very shortly. One of the most important sections of the report, which Mr. Bryan touched on in his contribution, is labelling. All the members of the committee are acutely aware of substantial transformation, whereby one can bring in chickens from Taiwan, sprinkle them with parsley and shrink wrap them and then one has a product that is labelled "Irish". That is nonsense and we need to nail it. The joint committee is unanimous in trying to build a common approach with the Departments of Agriculture, Fisheries and Food and Health and Children to deal with the COSAC sub-committee and to bring this issue to the EU Commission and subsequently to the World Trade Organisation for agreement. That is not a short-term battle and we know we must engage in it. We will need the expertise of the IFA and the Department and to harness their tentacles into Europe to achieve that success. However, I assure the delegates that this committee is unanimous in its support for Irish farmers and their communities. The entire community in many instances is at risk.

Chairman

Does Mr. Bryan wish to comment on the contributions of Deputies Brady or Morgan?

Mr. John Bryan

I agree with Deputy Brady that a statutory code of practice is required because as Deputy Morgan stated there is an unequal relationship between the consumer, the primary producer and the retailers. One has the dominant position, which they abuse as they are too powerful. Short of a statutory code of practice, with proper enforcement and strong fines, I would be concerned that the abuse of their position will continue.

Senator Ivor Callely

I thank the IFA for its submission. I am very happy to support parts of the submission. Certainly the new statutory code of practice should make an impact and I would like to see the facilitator appointed as soon as possible, but I am not too sure that will be the answer. I am not too sure how we will be able to impose certain purchasing decisions on individual groups or on chains.

I saw this before, when I was Chairman of the committee some years back and the then Fine Gael representative for north County Dublin and I met one of the largest supermarket chains in Ireland today. With a little bit of co-operation we were able to change the franchise that was coming in from the UK to put its produce on the shelves to Irish produce, and that was due to the work of the then Deputy Nora Owen and the contacts she had developed in her constituency that the sea change happened. It suited the supermarket chain because there was many a time when it had a sign on the shelf stating that the product was not available as the ship did not sail. There are benefits that we can sell to supermarket chains because our produce is as good as any if not better and we are able to supply it.

I spend a great deal of time in a very remote part of west Cork. It is a rugged area and it is a hard part of the country in which to make a living. Many people in that area have brought to my attention the difficulties they are experiencing in the marketplace. I am not too sure if the retailer is making a bundle of money. City and county councils are starved of money and their rate demands are quite high. There is a body of regulation with associated costs in every walk of life. What troubles me is that regulations on farmers are such that there are no longer small milk and dairy farmers with 35 cows. It is not feasible to operate because of regulation and the standards to which they must adhere. Regarding price, farmers do not get payment from the retailer but from the co-op. I do not know the breakdown but I would welcome that information because I have heard many versions of it. I would love to hear how much the farmers get, how much the co-op gets and how much the retailer gets.

There are also many regulations in the poultry industry and farmers cannot easily sell the produce. They must go through a process and get a stamp. I support the view of the delegation and the position it holds, particularly that expressed in Equity for Farmers in the Food Supply Chain. Where does the delegation see the scope and potential for development of farmers markets? Should there be codes of practice for this?

Mr. Pat Smith

From a farmer's perspective, and having had experience dealing with retailers over the past year, it is quite clear there is a fear factor of being delisted. That is how business is done in the retail trade. One must examine this in the cold light of day and say that it is a sad state affairs if that is how business is done. That is why so few people supply directly to the retail multiples. I have had direct experience of dealing with buyers, where they were paying a derogatory price of €150 per tonne for a potato crop before Christmas and selling at €600 a tonne, which was the market price at the time. We calculated that the cost of production was nearly €300 per tonne but the supermarket multiples replied that they had calculated this amount at €135 per tonne and that €150 per tonne was a reasonable price. Recent reports in newspapers referred to one of the major multiples quoting profits of approximately €300 million from Irish operations, which amounts to 9.5% or 10% net profit. Since 1995, the share the farmer gets of the final retail price continues to drop. Farm incomes have dropped by 50% and costs have increased by 50%. The price received for the product has dropped by 7%.

We asked the committee to consider a wider issue. The financial markets of this world are in turmoil as a consequence of a lack of regulation and forward thinking. On Saturday morning I heard a programme about corporate farms in America and the consequences of massive corporations running the show, as happens in America and Brazil. Ireland has a good family farm structure and farming by its nature is labour-intensive. Will we wait until the retail multiples destroy the fabric of rural life and the basis of producing food not only in Ireland but across Europe? In time to come this committee may wonder how the family farm unit was destroyed and why we do not have enough produce for the consumers in Europe. It is that serious and that is why we must regulate now.

Chairman

The meeting on Thursday morning will be at 11 a.m.

Senator Brendan Ryan

I welcome the IFA delegation. Many members of this committee have called for a statutory code of practice, having identified the need for it. In terms of specifics, there must be some meat in it if we can pardon the pun. The Equity for Farmers in the Food Supply Chain document refers to a requirement that retailers are treated fairly, that the principle of fair trade exists and that there is an equitable share out of the consumer. There is also reference to outlawing below-cost selling. What specific issues must be addressed in dealing with fair margins for farmers and growers and viable incomes in terms of regulating the relationship between producers, suppliers and retailers? The presentation also refers to the need for a code of practice to discourage retailers from undermining branded products with the use of own-brand products. How will this work?

This committee visited Dublin and Meath growers some time ago. We took a stand and we put out a press release about how the growers were treated by Tesco. I live among the growers in north County Dublin and the local newspapers see this as a major issue for the area. Within a number of weeks, another press statement pointed to a number of growers who were quite happy with the relationship with Tesco. My understanding is that Tesco, on foot of the initial bad publicity associated with the first visit, decided to ask various growers to sign some documents affirming they were happy. Then Tesco went to press and presented a number of growers who are happy. Members of the IFA were involved on both sides of that. What is the IFA doing to organise itself if there is a war to be won against large multiples? Is the IFA strategy not undermined by some members deciding they will undercut fellow members?

Mr. John Bryan

Senator Ivor Callely asked a question about labelling and I agree with his point. We see labelling as vital in this area. The cost of EU regulation, animal welfare, environmental measures and food safety places a major cost on every producer in Europe. At the same time, producers are competing in a supermarket with a product from outside the EU that meets none of the animal welfare or environmental standards. Worst of all, many of these products are mislabelled. There are several examples of this situation. The committee members referred to substantial transformation but it does not amount to this. It is just packaging with a label indicating it is produce of Ireland but there is nothing Irish in it. That must stop. I appreciate the strong stance taken by the committee on labelling.

Senator Ryan referred to regulation in retailing. We are looking for a simple cost of production plus margin. Forcing someone to produce below the cost of production is not sustainable in the long term. That product will be taken out and replaced with an imported product from outside the EU that probably does not meet the same standard. Most retailers do not care where the product comes from but there is a value in local produce. However, the profit margin is all retailers are concerned about. It was mentioned by Deputy Cyprian Brady that most of our retailers take three times the margin of their EU counterparts. If there was no profit in the retail section, they would not apply to build more and more outlets every day. Every council in Ireland has applications for bigger outlets. For every supermarket that opens, five or six local shops close. There is no benefit in employment and very little other benefit to anyone. There is a short-term gain to the building industry but it is very short when one takes into account the jobs lost in the area. They look for the consumer and the primary producer to pay for the building.

Senator Ryan also referred to own-brand products. Many retailers purchase a product from a supplier and repackage it in an own-brand carton to sell it at a lower price. That undermines the viability of brands. Ireland has major food companies and we have put a great deal of investment into them. If they are to survive in this economic turmoil and sustain jobs, they must retain some value in their brands. If the value goes out of their brands, the companies will cease to exist and there will be a major loss of jobs. It is one of many tactics used by retailers to undermine customers.

Senator Brendan Ryan mentioned the Dublin-Meath growers. The bulk of growers do not want to go to meetings with retailers because meetings are not held on a level playing pitch. They feel they will be left off the pitch when vegetable contracts come up for renewal. There are 130,000 farmers in Ireland and 87,000 are members of the IFA. We meet processors and retailers in every sector, whether it be beef, milk or potatoes, and we try to make EU regulations more practical.

It is not easy to deal with retailers. I have met many in recent months and they asked me to support their applications to build more stores. That should be self-explanatory — there are profits to be made and they want to expand. However, there are consequences in villages where a big store is built and it usually results in all the local shops being lost, while one third of the people are employed in the big store. In that context, I see very little benefit for the economy in huge retail expansion. Every day we push for the interests of the vegetable grower and the beef farmer but the retailer is so powerful that we need legislation. As Deputy Morgan said, we do not need that legislation in two years' time. We need it swiftly because voluntary codes of practice have not worked. We need a statutory code that will impose regulations.

Mr. Pat Smith

A suggestion was put forward to make a big investment in cabbage or something else. A farmer is not afraid of his neighbour but he is afraid that, as soon as his crop is ripe, a container load from Kent in England or somewhere else will come into the country and collapse the price. He is on a treadmill but he has to keep going to keep his nose just above the waterline. As the figures show, the farmer's nose has been under the waterline recently.

Above all else, retailers should be forced to have concern for the primary producer. We have met all the retailers at the highest level and they say they do not buy their produce from the primary producer. However, the decisions they make and the pressure they put on a processor have a direct impact on the primary producer. It is not acceptable for multinationals with so much power to emulate Pontius Pilate and wash their hands of responsibility for the impact of their actions through the food supply chain. That has to change.

Senator John Paul Phelan

I welcome the IFA delegation. Mr. Bryan mentioned the enforcement of existing competition law, which has always bothered me. The Competition Authority is a very important organisation with a very important job to do. It has focused all its energy in terms of the food industry on the relationship between the consumer and the retailer but it appears to have no focus on the relationship between the retailer and the producer. Has any headway been made in the efforts of the IFA in that area? Do we need to change the rules governing the Competition Authority so that a focus is put on the relationship between retailers and producers?

I agree with Senator Callely's points about labelling but I cannot believe what he said about the profits made by retailers, which were well answered by Mr. Smith. No one suggests that a corner shop makes huge money but the large multiples are creaming it. Creameries and co-ops are being pinned to the ground by the prices being paid by multiples and produce coming in from other jurisdictions is being sold at prices below those of produce from Ireland.

I do not share Senator Callely's view that farmers' markets would improve farm prices. A friend from Graiguenamanagh, who now lives in Barcelona and whom the president will also know, told me that a large creamery in Barcelona has started selling directly to the public from vending machines around Catalonia. I do not suggest that will be the ultimate solution for dairy farmers but it could be investigated because if it is being done in the north of Spain. I do not see why it cannot be done here.

As a result of the Icelandic volcano, shelves are empty of things such as high-end fruit and some vegetables. Could the question of food security provide an opportunity for producers here? The volcano could belch out all sorts of stuff for a while yet.

I agree with what the president said about over-capacity in the retail sector. We have all seen large retail units standing vacant and executives in local authorities, who make the decisions on planning applications and permission, must ensure we do not continue to grant permission in a sector which is already oversupplied.

Has the IFA looked at whether other jurisdictions do regulation well from the point of view of food supply? Can any such measure be put into practice in Ireland? The Irish Farmers’ Journal referred to a conference held last week on futures markets for produce. It mentioned the possibility of a European market in milk and suggested it would be good for producers here. Can the IFA comment on that suggestion?

Mr. John Bryan

We have serious concerns about the way the present competition law is being interpreted. It is being interpreted with a very narrow perspective but if one wants to do the best for the consumer one must take a longer-term view. In the long term it will not benefit the consumer to allow a retailer to shove somebody out of business tomorrow. The Competition Authority's interpretation of competition law takes no account of long term viability or of the best interests of the consumer and the economy. It only looks at tomorrow and that is very short-sighted.

There need to be changes in legislation and in the interpretation of legislation. In the past the Competition Authority has prosecuted the IFA, such as when we looked for fair play from beef processors, and it has threatened us on several occasions. However, when we made a few complaints about monopolies and cartels it had no interest. There has to be a change in approach so that the broader public good is taken into account.

We export 90% of our beef and 85% of our dairy products so there is a niche opportunity for a few farmers' markets, but only maybe for 1% of our production. If 10% of the people use these markets it will amount to 1% of our total production. We have a small population and the same applies to the suggestion that we sell milk directly, as they are doing in northern Spain. We have far more dairy cows than Spain and yet do not have one quarter of its population. There are between 60 million and 70 million people in the UK but it only has 30% more dairy cows than we have and it has a smaller beef herd. With a huge domestic market there are golden opportunities for such markets but Ireland is a food exporting country. Our food industry is a vital part of the economy, worth €25 billion and with 250,000 jobs depending on it.

There has to be tightening up on labelling. The French are the only people who have gone further than we have but several countries are now debating it. We have spoken with the European Parliament and the Commission on the subject. There has been a great deal of talking but it is now time to move the matter forward. Labelling is an area that needs to be greatly tightened up. The misleading and false labelling that goes on leaves the consumer at a significant disadvantage.

We have abandoned a lot of animal welfare practices. All pig and poultry men have incurred very high costs to move from the practices they used a few years ago. They now compete on the supermarket shelves with products from places that are light years behind us in animal welfare standards. That is not a level playing field.

We have proposed that we consider futures markets in grain, milk and other areas. There is room to progress those opportunities, but in the short term they are not great. We must consider them, however, because we are trying to raise at every level the issue of the need for contracts with processors and retailers.

We view contracts as the future. The beef industry went through a tough winter and the farmers sold all their beef below the cost of production. A lot of those farmers say that they will not operate next year without contracts.

Senator John Paul Phelan

Has the IFA looked at other jurisdictions that regulate in that way? We are talking about a statutory code of conduct. What do they do elsewhere?

Chairman

Which country has the best practice for us to copy?

Mr. John Bryan

For labelling?

Senator John Paul Phelan

No — for a code of conduct.

Mr. Pat Smith

A number of countries have one, but they are at different stages, and no one has perfected it. The United Kingdom had a voluntary code which it has now made statutory. It has brought in an ombudsman, which is the retailers' biggest fear. They fear that somebody who is independent will try to make things work. The situation is evolving.

The problems that we face as farmers in Ireland are typical of the problems that farmers throughout Europe experience. That is why it is so important that every country progresses a code. We need a code not only in Ireland, but in Europe.

Given the current volatility, futures have a role to play. However, we do not want what has happened to other commodities around the world to happen in the context of futures for milk, or whatever else we choose. The average barrel of oil is traded 13 times. Our grain farmers are on their knees today because of the speculation that took place two to three years ago, which took us from a boom to a bust scenario.

In the context of trying to get fairness for farming families, it seems neither reasonable nor fair that the vital commodities that society needs for its well-being can be traded and speculated on in the way that some other commodities have been. We need those tools to help us with grain and milk, but they must be used in a way that benefits the farmer.

Deputy Edward O’Keeffe

The IFA has been at the forefront of this issue for the past year and a half since it has been coming to the committee. We have travelled around, and been to the North of Ireland. However, it often feels as if we are putting our stalls in the window and making no progress.

The IFA calls for action today, but that is not easy to get. I understand that many retailers and multiples — including many Irish retailers, which I was surprised at — object to a statutory code of practice. I am looking at the IFA's proposals, which it has set out in its paper to the committee, to ban hello money, pay to play money, below-cost selling and forcing suppliers to fund discounting campaigns.

Suppliers have spoken to me, and I have given their names to the committee for investigation. They are living in fear. Some of them employ 300 or 400 people. They are prepared to go public on the issue. That is what is going on out there in the marketplace — it is unreal.

We should consider what happened in Thurles with regard to the Competition Authority. There were 80 or 100 jobs in the Campbell's soups plant, which was previously Erin Soups. The authority found that the business was anti-competitive, and the plant was closed down. It is now an eyesore in the town. It was an advantage to farmers because Irish foods were probably processed in the plant, but that is what the Competition Authority came up with. That has been debated since. It happened four, five or six years ago. That has happened nowhere since in the world — only in Ireland. That is why I question regulation all the time, and what it is all about. We can close down plants, or we can relax regulation.

We have a problem. Many of our food companies, which we are trying to defend, are importers of raw materials. They do not want labelling of the country of origin — I refer to the trick that was mentioned earlier in which breadcrumbs, parsley and lettuce are added to the product when it reaches Ireland.

What is Bord Bia's role? Would the IFA like that role to be strengthened? Its statutory brief is weak, under the An Bord Bia Act, 1994, and it needs more teeth. It should take the lead in the food industry in Ireland.

The McCarthy report suggested that the food division and other activities of Bord Bia be merged with Enterprise Ireland, but in my view, the lead organisation in the food area should be Bord Bia and not Enterprise Ireland. There is a need for a merger, and to open up that area, but Bord Bia needs to be the lead body.

I have been to Denmark a few times in another capacity, and I note that it is very conscious of its food. It does not import much food. If you look around the supermarkets there, you have to go deep down into the chilled section to find products from other parts of the world. The Danish products are on top, and Denmark makes a point of putting them there. The shelves are checked to ensure that Danish products are on the outside. That is part of the way Denmark does business. In terms of food, it is the most consciously nationalist country in the world.

Parking is a problem, as it has encouraged out-of-town shopping. That is where we are falling down. The finest multiples in this country, and SuperValu and franchise stores in towns and cities, are losing market share because of the parking charges in towns and surrounding areas. We are seeing a huge growth in the number of Aldis, Lidls, Tescos and other out-of-town stores, because of the parking charges.

The Minister for the Environment, Heritage and Local Government, Deputy Gormley, appeared before the committee a few months ago. He promised that he would consider legislation on parking in those areas. Local authorities are starved of funds and parking fees are a source of funding for them, but it is not fair that ratepayers in the towns are suffering and losing market share. Irish people, by and large, do not like to pay for anything, it is an Irish syndrome. That has to change. The floor space for stores is 30,000 sq. m or is it 30,000 sq. ft.? The Minister has given a promise that that will not be changed. We have seen what is happening in the North of Ireland with hypermarkets, and what is happening in Britain and America.

The multiples come to Ireland and make big statements. Politicians on all sides of the House, who can be notorious with regard to such things, are often carried away by those statements. The multiples promise 400 new jobs, but if we break that number down we find that there are probably 100 permanent jobs and 100 part-time jobs, and the others are for female staff. We were told that about a town in Northern Ireland. There is nothing wrong with that and I do not wish to say anything against Ms Farrell, but I make the point that that is the way it is done.

Deputy Leo Varadkar

I wonder whether there are any female staff in the IFA.

Deputy Edward O’Keeffe

Strathroy milk was mentioned earlier. It is in every shop in County Cork. I come from the same area as Ms Farrell, and I know that it is in all the small shops.

I congratulate the president of the IFA on his efforts and the campaign he ran on Brazilian beef. Many people thought he was leading a ghost campaign, but he had success. He must have a good background in policing, or I do not know how he would have found out what he did. I have been out there myself and I came back with a different story. He obviously went into the hills, the valleys and the by-ways; that was good surveillance on his part. He discovered what was going on there.

It is the case that 90% of the chicken sold in Irish shops is imported. There is practically no Irish chicken on sale any more in this country. That is a serious indictment of Ireland, the food industry and shops.

We are about to negotiate on the Common Agricultural Policy with regard to single payments. The Lisbon treaty has been passed — I thank members for their support of the Government on that. There will now be much more discussion and decision making on Europe in the Parliament.

Is there any way that we can get a change in the rules for more labelling of the country of origin? I have always fought for that, but I am fighting a losing battle. We could get some semblance of the country of origin, rather than having a little label on the back of a pound of rashers or the back of a chicken that says "EC" or whatever. That is misleading. If we can simplify that, we would make good progress. The housewife would not be confused when she looks at the product in the shop. There must be a way around that in the new negotiations. I should say to my colleagues on the other side; they will probably be around for the final negotiations. Therefore, I encourage them to participate.

Chairman

An erudite contribution from Deputy O'Keeffe.

Deputy Edward O’Keeffe

I am a realist.

Mr. John Bryan

I agree with most of what Deputy O'Keeffe said. We must have action. I understand what he said; I would expect the retailers to object. They are able to get away with very loose regulation and have abused their position. They would object to any regulation but it is time the Government moved on and ignored those objections with a view to doing what is best for the economy and the consumer. The Competition Authority has already said it has concerns that they do not take a longer term view and there is probably room for change.

I welcome the points made by Deputy O'Keeffe. We hold the view that there is a need for a lead body. Bord Bia has done an excellent job in promoting Ireland as the food island. We have a good story to tell. We produce food in an environmentally sustainable way to the highest standards of animal welfare and food safety. Bord Bia has a well-established international reputation for delivering that message. In the recent past it did an excellent job when required. Bord Bia is doing a good job. I agree with Deputy O'Keeffe that its position should be strengthened. It is imperative that it is retained within the Department of Agriculture, Fisheries and Food because that Department polices food from the day an animal is born through the traceability system, through the production system, until it ends up on the shelf. We sat down with international customers who hold the view that the inspection by the Department of Agriculture, Fisheries and Food and the promotion of Bord Bia are very important.

Deputy O'Keeffe mentioned storage space. I am concerned that in a small country of 4 million people, hypermarkets on the edge of towns would not be beneficial to the people in towns. The Deputy's point about parking facilities is probably valid. Many small shopkeepers make the point that in an economic recession people will make a decision based on the €2 parking meter charge and will drive to the outskirts of the town. This is an issue that should be examined.

I thank Deputy O'Keeffe for his comments about the Brazilian beef campaign. Certainly, reform of the Common Agricultural Policy is important to Ireland because we are huge net beneficiaries and it is important that we continue to receive that money. Within the negotiations we will do what we can, in line with our Brazilian campaign. We went on the record with the European Parliament, DG-SANCO and others to state that all food coming into the EU should meet an equivalent standard. There is an opportunity to insist on strengthening the regulations in that area. Double standards are unacceptable.

Deputy Damien English

My colleague, Deputy Edward O'Keeffe, has covered most points and I agree with most of what has been said. This committee, cross parties, will want to work on this issue and make some progress.

The issue of parking is not merely about cost but rather the inconvenience. Most of our towns are badly laid out and do not facilitate small business and local shops in the way they used to. We must find a solution to that problem. The Minister, Deputy Gormley, is aware of it but we need to apply pressure from all sides. It may mean making money available to local authorities to buy up land for town centre car parks which they own and will be in charge of. The IFA has a role here also to apply the pressure because it helps its own local product.

In the IFA's meetings with the retailers, do they realise what is at stake? Many farmers are producers and will probably go out of business eventually. If that is what they want, they will import from the UK or wherever. What are they saying to the IFA? The IFA is not seeking a higher price for the consumer but its fair share for what it produces and it is entitled to that. That is a principle about which I feel strongly. The idea is not to put more pressure on consumers but rather fair play for everybody. I have to question some of the retailers whose corporate social responsibility is off the wall. The margins they are trying to squeeze out of the Irish market are much higher than the other markets. That is not on. I support the IFA in its efforts in that regard.

The hoover effect was mentioned. This is killing some of our small rural towns. Given what is planned across the Border, business will be sucked out of this country one way or the other and we will all lose. What will happen is that there will be fewer products on the shelves and the consumer will lose. The IFA must play a greater role in getting that message out there. There is a gap in the provision of information from the IFA and so on to the urban dweller. Having discussed the issue with them, they would support the cause if they got the right message. The retailers have such massive advertising power and are getting the message out about prices and so on. The people in most houses do not fully understand the position of the IFA. We all need to try to get better messaging because I know they will buy in more and would be prepared to help local products.

While I accept that 90% of the market is exporting, it is important to secure and nail as much of the domestic market as possible. Best practice was mentioned. We can take those issues and try to bring them forward.

Chairman

As the delegates will be aware, we have been looking at this issue for more than a year and during our investigation we have heard from many contributors. At this stage we have no doubt that certain organisations are clearly using their market power to conduct their business in the market place. I was struck by the sheer reluctance of many companies which appeared before the committee, a reluctance born out of fear of reprisals in regard to delisting. If one declines demands, one can have a product delisted or be put out of business. The power in the market is divided unevenly. That is a nice way of putting it. I am pleased the IFA has put its evidence on the record today.

Our committee focuses on the relationship between suppliers in the grocery trade. There are many pieces of evidence but we do not know from where it comes as it was provided on a confidential basis. Many practices are unacceptable, including the facilitation of "hello" money in many guises. We have already called on the Government to eliminate these practices. Today, we use this opportunity, along with the IFA, to remind it of the urgency to do so. Given that we are in recession, there is no room for unfair disadvantage in any aspect of the matter. Everyone is trying to survive and grow. However, that can only be done in a way that is acceptable to society and in a way that respects the legitimate interests and expectations and business prospects of one's trading partner. One cannot just have the muscle and the power. I have said this many times and I castigated the Competition Authority and had no hesitation in doing so and I will do it again.

At the end of the day the question has to be asked, who polices the Competition Authority. The Competition Authority is the ultimate arbiter. What it says appears to be the end of the line in regard to the law unless it goes to court on a point of law, which is a very expensive exercise. There is a glib attitude out there that 60% of our exports come from Irish manufacturing companies, of which agriculture is the base. It is our one strong native industry and it is trying to survive. It supports well over 250,000 people and about one in seven of our workforce is engaged in agriculture. We have huge exports and we have the comparative advantage of a green isle.

I have always had the view that we failed to capitalise on our green, clean image and I reprimanded the IFA. If we are not honest with one another we are no good. The IFA along with all farm organisations got too fond of investing too much effort in commodity marketing in 1974. I know exactly why it happened. Short horn cows predominated on our landscape and farms produced 180 gallons of milk per cow. The Dutch had 650 gallons of milk per cow. We fought for ten pence extra per gallon. Whatever it was, we got it and it widened the differential. Manioc and tapioca and everything else were coming in cheap to the ports of Rotterdam. We did not have those products. If we increased production by 25 gallons they increased by 75 gallons. The differential widened. I know why there is a drop. Of course we saluted, we waved the caps. It reminds me of the old marts about which Deputy O'Keeffe would know more than I. When Éamon de Valera or somebody else arrived in a town, the caps were waved in the air. That was the way we saluted a farm Minister at Dublin Airport. I was a student in Dublin at the time and I recall it very well. I never subscribed to that. My view was simple. We lost an opportunity to export our products. We could have dominated the export market in advanced processing. We are the cleanest producers and as has been said, by the IFA we are now 110% regulated. I add my voice to Deputy Edward O'Keeffe's on the way the IFA highlighted the operation of producers in the Brazilian market. The IFA showed what can be done and that is a great tribute to the organisation. If the regulatory bodies in Europe were doing the business, the IFA would not have had to do this. The bodies in Europe fell down. I salute the French for not losing an opportunity to advocate and promote their products. We are like little mice, too reticent, almost; we must be good boys and girls in the European project.

We have 260,000 people employed in agriculture and it is still the backbone of the economy. During this recession, these people are maintaining the infrastructure and fabric of rural Ireland. Let nobody ever say that they are not the backbone. I may criticise them, but I stand and fall by that. I salute the efforts the IFA makes and will always support those efforts.

Deputy Edward O'Keeffe is correct, as I read reports in the weekend newspapers, that retailers objected to the seven conclusions in our report. We advocated a statutory code of practice, backed up by an ombudsman. We were unambiguous about that recommendation. Unfortunately, Mr. David Byrne is no longer a Commissioner for Health and Consumer Protection, but we are sending our report to his successor.

My family has a convenience store and like many corner shops we are service outlets for rural Ireland. If the multiples get their way, they will wipe out every convenience store and there will be nothing left. The multiples enjoy a higher profit margin in Ireland than in any other country in which they operate. They are portraying themselves as the saviour of the consumer. Let the consumer not be mislead. The consumer has family connections with people working in the many convenience shops either on a full-time or on a part-time basis. As Deputy O'Keeffe said, those shops are part of the fabric of rural areas. We do not want to see ghost towns or villages. A shop that provides employment for three or four people is not to be laughed at in the current environment. I agree with Mr. Bryan when he states that we need an open and transparent market, so that everybody can be fully informed and base his or her decisions on informed choice.

When I hear multiples worrying about the cost of convenience shops to consumers and shedding crocodile tears for them, it causes me to wonder about the local employment in local shops. I welcome the employment in the multiples, which is very important for the economy, but their objective is to hoover up all the outlying shops so that the customer must travel 15 or 20 miles to the nearest big store and is a captive audience.

I know the IFA has the well-being of rural Ireland at its heart. So have many members, but we are now classified as old-fashioned. I am quite happy to be classified as old-fashioned. I thank the delegation from the IFA for giving of their time to this worthy exercise. If the IFA wishes to have issues addressed in the future, we will be glad to hear from it.

The joint committee adjourned at 3.30 p.m. until 11 a.m. on Thursday, 29 April 2010.