The matter on the Adjournment is the need for the Minister for Agriculture and Food to come to the assistance of Cahir Bakery which is threatened with closure and with the loss of 25 jobs.
Adjournment Matter. - Cahir (Tipperary) Bakery.
I thank the Chair for allowing me to raise this important issue. I would like to share my time with Senator McGowan and with Senator Ferris who is in my constituency in south Tipperary.
This issue is in connection with the Central Bakery in Cahir, County Tipperary, which is threatened with the loss of 27 jobs. My latest information is that that may happen if the Minister does not take immediate action on Friday next. In a small town with a massive unemployment rate — there are over 758 people unemployed in Cahir and the immediate district — one can imagine the effect 27 extra redundancies will have on that area. Most of these people are young men with young families, some with mortgages and other commitments. It is a bleak outlook for these young people. My heart goes out to them. They are in a town where there is very little industry and where there has been much emigration over the past number of years.
The Central Bakery in Cahir have supplied high quality bread products to the people of south Tipperary, Waterford and adjoining counties for over 100 years and have provided good, permanent employment for their excellent staff. They used Irish flour produced in one of the greatest wheat-growing areas in this country in south Tipperary, which was processed by a sister company which closed some years ago. I pose the question to the Minister: is Mr. Ben Dunne using Irish flour in this bread war? I take lightly his statement on television last night and his press statements because it seems people with muscle like that can say and do what they like. The Minister has power to intervene at this stage in the national interest.
The bread war was started by Ben Dunne in a very unfair way, with unfair competition. It is alleged he is employing cheap labour in his outlets and is importing cheap flour. There is a question mark over the quality of the product he is selling.
The Senator will have to deal with Cahir Bakery. If I allow the debate to broaden, where would I draw the line?
I will be guided by the Chair. I was speaking about the quality of the product that is competing with the product produced in Cahir. I do not like to have to raise this matter here this evening and speak about people losing their jobs. There will be great hardship for the families in the immediate area of Cahir town and district and also for the farming community. This bread war will not stop with a bakery closing. It will affect the farming community and the milling industry. It will be the cause of more imports coming into this country, whether from within or outside the EC. It is also alleged that some of this cheap flour is imported from the United States. I hope the Minister will investigate that.
I cannot see it as fair competition when a firm employs cheap labour. It is an abuse of young people with all the unemployment we have today. Where is the fair play there? If Cahir Bakery employed cheap labour over the years maybe they would be more competitive than Ben Dunne. They were not so irresponsible: they were very considerate towards their staff down the years.
The family grocer will also be affected. He provided an excellent service to people and gave long and short-term credit to families when they were not too well off. He did not charge any interest on this. I can imagine the response a poor family would get from Dunnes Stores. They would go out the door empty-handed.
It is not only the workers who are in danger here. It is the farming community, the milling industry and also poor families. In the long run, when Ben Dunne has put all the bakeries to the wall he can jack up the price of bread and do the same with other products. That is the dangerous situation we have here tonight.
The future of small shopkeepers who are trying to pay rates on their premises and taxes of every kind is at stake as well. They provide a service because Mr. Dunne does not have an outlet in every part of the country. What about families in rural areas who need bread when there is a foot of snow on the ground? Where will Mr. Ben Dunne and his service be then? Small industries like Cahir Bakery brought quality bread to every boreen and hamlet through the years. If there was some bread left over it would be taken back the following day. We do not have that kind of service from Mr. Dunne.
I appeal to the Minister to act immediately and save the jobs in Cahir and also in the other smaller bakeries around the country. Thousands of jobs are at stake. If the Minister does not act there will be a calamity. The bakeries will fall, just as apples fall off a tree on an October day. Over 7,000 people are employed in the bakery industry. Up to now it was good permanent employment. Successive Governments have tried to stem emigration and have travelled to the four corners of the globe trying to create jobs at enormous expense — anything up to £20,000 per job. Here we are taking lightly a bread war that will cost thousands of jobs. Where are the economics there? Where is the commonsense? Where is the fair competition?
Over 250 people are employed in the bakeries in south Tipperary. Other people in the House tell me there is a fear throughout the Twenty-Six Counties about this problem. There are 250 permanent jobs in danger in south Tipperary alone. Ben Dunne talks about fair competition. At present he is selling bread in Northern Ireland at 68p. When you compare that with 39p in the Republic I ask the question: is that fair competition? I wonder does the Minister know anything about that?
I ask the Minister to get off the fence and listen to the people in this House. The cream of the country exists outside Newlands Cross. Do not forget them because when men and women were needed they were found on the other side of Newlands Cross in the boreens. The small farmers and the workers gave us the freedom we now enjoy. Are they to be sold out because a multinational can come in and do what they like and ride roughshod over us? In a few years time Mr. Dunne will be able to dump what he likes into this country. There are powers vested in the Minister if he acts in time.
Just a month ago the Minister for Industry and Commerce, Deputy Burke, deemed it desirable to impose a prices order for bread, forcing retailers to charge not less than 55p for a white loaf. The order followed discussions between the Minister and the supermarkets, during which he failed to win agreement for a voluntary restoration of prices. On that occasion the price of an 800g loaf had tumbled to 35p. Deputy Burke's order promptly restored the price to 55p, but within one week he revoked the order and said that it would put an end to the price war. Almost immediately the price war resumed. A loaf is now selling at 39p but Deputy Burke seems content not to intervene.
How could Deputy Burke consider 55p a proper price for a loaf of bread just four or five weeks ago and now regard 39p for the same loaf as satisfactory? It is crazy. I appeal to the Minister to act quickly in the interests of the people — workers, farmers, shopkeepers and consumers. In the long run the housewife will be caught. There will be a monopoly and people in the industry will be sold down the Swanee. I do not want that to happen because the finest people in rural Ireland are employed in our bakeries. I appeal to the Minister to act immediately.
I appreciate the opportunity to say a few words on this important subject. While Cahir Central Bakery is a long way from where I come from in Donegal, everybody is concerned at recent developments in the bread industry. If, for one second, I was convinced that the price of bread would stay at 39p then I would not stand up to comment on it in the Seanad but I have a strong feeling that the price of bread will not stay at 39p. That is the crux of the matter and that is the real difficulty. Bread is being dumped from the North of Ireland.
The Senator should read the wording of the motion before us. It is the need for the Minister for Agriculture and Food to come to the assistance of Cahir Bakery, with its threatened closure and the loss of 25 jobs.
I hope to stay on the motion. However with your guidance and assistance, a Chathaoirligh, I have to comment on the basic reason the Central Bakery in Cahir and others are in difficulty. It is basically because of the sale of the 39p loaf. I might point out that the bakery baking the 39p loaf is not in a position to sell the same loaf in the North of Ireland at 39p or indeed at 49p. That is the tragic reality. I see this as a short term price war among the major supermarkets who will not be able to sustain the reduction in the price of the loaf. I view this as a very serious problem for the Central Bakery in Cahir. Indeed I can foresee the same consequences for bakeries in other parts of the country.
I am in support of the motion out of concern for the people of Cahir today and for, possibly the small bakeries in other regions, including Donegal tomorrow.
It is very disheartening to see three lorryloads of bread from a bakery in Belfast being dumped in Donegal and other parts of the country and, at a price at which they cannot sell it in the North of Ireland. The reality is that it is dumping and nothing else. The people who contend it is not below-cost selling have never ascertained how that price is determined. Should we take their word because they utilise modern technology in the production of bread? I do not think so. Flour is a product produced from the land whose cost is easily ascertained. We should also remember that the labour costs, whether in London, Dublin, Cork or elsewhere in Europe do not vary significantly. We have many modern bakeries utilising conveyor chain ovens but, for the life of me, I cannot account for a price variation per loaf between 76p and 39p. That differentiation has not been explained by anybody. I would ask the Minister to ascertain from those people who claim they are not selling below-cost, at 39p, how that price is determined because they owe the public an explanation. If we could sustain the 39p loaf it would be of tremendous benefit to our under-privileged and poor but I predict that price will not be sustained, which will have disastrous consequences for the many people employed in the bakery industry.
I thank Senator Seán Byrne for allowing me share his time. We represent the same constituency and, therefore, have a common interest in this problem. I welcome the Minister of State at the Department of Agriculture and Food who has specific responsibility for food and food products. In this House we have debated, to our mutual advantage, the whole concept of the quality of food available to people and its improvement. That is his brief, how he views it and that has been the manner in which he has worked since assuming office.
And he has done it well.
He has. That is also why we defend the Central Bakery in Cahir because they have produced a quality product over a long period and provided much employment. There are agencies available to the Minister whose expertise could well be utilised and deployed in this connection. For example the IDA have finances available to assist such bakeries to modernise and develop technologically, rendering them capable of competing with the monopolies in the bread industry, such as Dunnes Stores and others. Why should small bakeries such as those in Cahir, Tipperary, Hickey's in Clonmel, and others have to compete with these monopolies so that 50 per cent of their production is being dumped while this undercut bread finds a market. It is common knowledge — and those who have bought it so testify — that this bread being produced at this low price is a bad product; it is not up to standard.
I would like to know what was the mandate of the consumer affairs committee which investigated the product and its cost. For example, did they take into account the quality of the ingredients used? Did they take into account the baking process? Did they take into account the wage structure of its producers? We should remember that that workforce must rise at 3 a.m. or 4 a.m. to put real bread on our tables. If people like Dunnes can press buttons and produce the equivalent of sawdust being sold as bread, then we have a duty to ensure quality as well as quantity and ascertain that the weight factor is right so that the bread on our tables is good and wholesome.
Irish consumers are prepared to pay premium prices for good products. That has been proven in respect of organic food in Cahir where that concept has been piloted and put to the test. They have produced excellent expensive food of tremendous nutritional quality. When we examine the price of bread it is important we take everything, including ingredients, into account. Much suspicion has surrounded the ingredients of low cost bread which has created many problems for bakeries such as the Central Bakery in Cahir. We are defending them today but it will be somebody else's problem tomorrow unless the Minister of State can convince his senior Cabinet colleague that he has a role and a responsibility in this area, that consumers are prepared to back him in his efforts to protect jobs in the bakery industry and also, in the long-term, to protect the consumer from the monopoly that will follow inevitably this bread war.
I am glad to have an opportunity of responding to this motion of Senator Sean Byrne and I wish to thank him for raising this matter and also his colleagues Senator Michael Ferris and Senator Paddy McGowan. While I have no wish to return to this House on a permanent basis, I am very glad to pay the occasional visit to my former colleagues here.
I am concerned about the Central Bakery in Cahir. I know that particular bakery well enough because I pass through Cahir twice a week at least. I want to say here that I will immediately be available to the principals of Cahir Bakery. If they find it difficult to come to Dublin tomorrow, I will meet them in Cahir tomorrow evening on my way to a more isolated part of the country along with some IDA officials to see if there is any way in which this threatened closure can be averted.
I have for the past two years put forward very clearly the opportunities and the difficulties for the bakery industry, particularly in the document "Strategy for the Development of the Food Industry". I set out very clearly what individual firms and what sectoral food areas have to do not alone to survive but to enhance their organisations. Additionally, I had a very intensive study done on supermarkets in Ireland and I found that imported into Ireland were £200 million worth of food products which could be produced at home. Of that amount £50 million is of flour and confectionery and bread products. That is about £1 million per week.
I have said clearly to the industry over the past two years that they must be innovative and progressive and that they must modernise their plants. They must also visit shops and the supermarkets around the country. It is not necessary to go to the major supermarkets here in Dublin or any place like that; you can go into the shops in Cahir, Clonmel or Clonakilty and find a whole range of imported bakery products which could be and should be supplied by our bakeries here at home. There are millions of pounds worth of opportunities available to the bakeries and to the bread industry.
Against that background I wish to state that I am available to meet those specifically involved in the Central Bakery in Cahir along with the IDA to see in what way we can set up a strategy, not alone to rescue the company and prevent its closure but to establish it as a viable industry in Cahir. There is no reason that cannot be done because alongside closures there are examples of start-up companies, relatively small companies, for example, Seery's Biscuits started in a back kitchen but is now a brand leader. Another example is Kelly's Biscuits in Dublin and Braycot bakery products in Wicklow. These are all very small companies but the one thing they had in common was the fact that they kept pace with the changes which were taking place.
There is no use producing a product if the consumers are not prepared to buy it and eat it. Any industry, be it the bakery industry or otherwise, that does not keep pace with the changes taking place in society is doomed. There will be substantial casualties in the Irish food industry and the bakery industry if the people running those businesses are not alert and aware of the fact that the demands, taste and the trends of consumers are changing very radically. If they are innovative and carry out their consumer research there is certainly a bright future for them. However, those who are ill-prepared will go to the wall.
We are not near 1992 yet it is the wish of the Irish people that we should participate in a single European market where not alone will we have competition from larger units within the country but we will face the full brunt of international competition. People should not close their ears to the reality of international competitive industry. They must develop a strategy not alone to cope with the reality of 1992 but to take advantage of it, because there are significant advantages for Ireland. We have excellent workers. We have excellent graduates. We have very substantial grant aid in the food industry. There is a grant of up to 75 per cent for modernisation and reequipping industry and firms. We have training grants of various kinds for our workforce and they will have to be availed of. To rely on the taxpayer and on subsidy of some kind is just not being realistic. The one message I wish to give to the industry while giving my commitment in relation to Cahir, is that industry in general will have to gear itself for even more intense competition in the future.
I have in the document "Supplying the Supermarket" named 28 specific products that could be produced here. It is quite easy for anybody to see those products when strolling through any supermarket or shop. Entrepreneurs can take the opportunity to make a profitable enterprise out of an ailing and threatened industry or factory. Resources, whether from the IDA or people's own resources, will have to be directed towards exploiting those opportunities not alone in Ireland but on the export market.
Again, with modern technology there is a very substantial export market. There is a supermarket trade in the UK of £30,000 million per annum. There is a catering market there also of £10,000 per annum. I have initiated discussions and I have met delegations and organised seminars to say to people this is what they should be looking at, not to rely on the hard-pressed taxpayer, on subsidies, on the old order of things, because that is not the way things are going. Before we reach 1992 which is staring people in the face they should avail of the very attractive grant aid and training programmes because there is no future in the old order of things.
In relation to pricing in general, as you are aware my colleague, Deputy Burke, has being dealing with this question in recent times. There is no doubt that this price issue has highlighted the structural weaknesses and the lack of modernisation in the industry. For traditional products there is an over-capacity there and that will have to be sorted out because the underlying problem is causing this pressure and will threaten the industry itself. Those fundamental changes have to be addressed straightaway.
In the area of white bread, you do not have to read health magazines or watch diet programmes on television to realise that the demand for white bread is declining and that there is a more balanced diet demanded by the consumer. Our mothers were experts at baking brown bread but we did not appreciate the quality and health-giving aspects of that brown bread. Today the modern consumer is learning that wholemeal brown bread is good for them. There is a demand for it. Some of the brown bread we eat from time to time must be prepared in concrete mixers because it is quite inedible. There is an opportunity there for smaller bakeries throughout the country to have a look at those specialist markets and to take advantage of them. Bakeries will have to find ways of doing that and change the whole culture within the industry.
Again, I want to reiterate my willingness to respond to Senator Byrne and Senator Ferris. Their action is in line with their diligent work on behalf of their constituents and the firms in their constituencies. They are right to bring those issues to the attention of Seanad Éireann, and to the attention of the Ministers responsible for their areas. I will be glad to meet the people from Cahir Bakery. With good sense, with willingness to modernise and to sharpen up and to take advantage of the consumer demand for quality products we can sort out not alone this problem in Cahir but in the industry in general.
I thank the Minister for his assurances about Cahir Central Bakery.
The Seanad adjourned at 8.20 p.m. until 2.30 p.m. on Wednesday, 8 March 1989.