Report: suppliers being pressurised

THE Competition Authority has confirmed that retailers are pressuring suppliers – including the top Irish food firms – for better deals.

Many Irish food suppliers believe they will be forced out of business, warned economist Jim Power when he addressed the Oireachtas Agriculture Committee last week.

He said the big retailers are abusing their buying power in the market, and warned that 230,000 jobs in Irish food and drink production are endangered by retailers abusing the enormous buying power they gained when the Government abolished the groceries order in 2006.

But the Competition Authority has welcomed increasing competition between retailers and their suppliers as a response to more price-conscious consumers who were shopping around for the best bargains.

To help Irish suppliers – including food firms – compete and survive, the authority urged the Government to reduce the cost of doing business in Ireland.

In February, Tánaiste and Enterprise Minister Mary Coughlan had asked the authority to investigate the retail-related import and distribution sector.

She said on Tuesday their report confirms there are no major systemic problems in the Irish retail market. Grocery policy must best serve the consumer, while realising the importance of the indigenous food industry and of the retail sector, both of which must be vibrant and competitive, she said.

She revealed her department is preparing a code of practice to bring further transparency and ensure a balanced relationship between all elements of the retail chain.

Competition Authority boss Bill Prasifka said: “Falling retail prices are proof that competition works.

Between January and May this year, grocery prices fell more than 2%.

The authority revealed that some retailers are driving down prices by finding cheaper suppliers if they can’t negotiate better deals with their existing suppliers. It noted that Tesco is moving to suppliers in Britain for many grocery items.

Among firms under pressure from retailers are Kerry Foods, Breeo Foods, and Glanbia, three of the top 10 suppliers to Irish retailers.

Kepak, Carton Brothers, AIBP and Tenderlean Meats are identified among top meat suppliers. Main dairy, milk, cheese, eggs and bread suppliers are Glanbia, Kerry Group, Breeo Foods, Irish Pride, Cuisine de France.

* As the retail business adjusts to new levels of competition, farmers will be watching the price trend in dairy product prices closely.

European Commissioner Mariann Fischer Boel said this week that milk is sold below cost to lure consumers into buying other overpriced products, and that retailers keep the profits, and the bill is passed on to struggling dairy farmers.