Fresh push for farmers to find retail equity
Their leaders have been calling on the EU and the Government in Dublin for action to ensure there is a more level playing field along the entire food supply chain from farm to fork.
Last year, the Competition and Consumer Protection Act (CCPA) was enacted and while it was generally welcomed, there were some critiicisms it did not go far enought to protect the interests of primary producers.
Irish Farmers’ Association president Eddie Downey said the legislation was a first step, although it did not address a number of key issues to restore equity to the food supply chain and curb the dominance of the retail multiples.
He also said the bill failed to include a prohibition on below-cost selling, that there was no provision to put limits on the use of own-brands by retailers, and no compulsion on retailers to disclose profits.
Mr Downey said the regulations to be introduced as part of the legislation would need to recognise the role of the primary producer in the chain, especially those in the fresh produce sector.
“IFA believes that the real test of the new legislation will be a fairer return to producers, which covers the cost of production and leaves a margin to reward their work and investment,”he said.
Phil Hogan, the agriculture commissioner, speaking at the IFA’s 60th birthday celebrations in Dublin last week, said he will not hesitate to call for changes so that farmers are not put out of business arising from the squeeze on their margin of profitability.
“All players in the food chain should realise that it is imperative that producers get a decent return for their raw material. Without producers none of the downstream businesses would even exist,” he said.
Meanwhile, Enterprise Minister Richard Bruton has published the draft of those regulations and has invited comments from interested parties via a consultative process with a February 27 deadline for submissions.
The regulations are also geared towards ensuring that dealings in the sector are fair and sustainable and operate in the interests of jobs, consumers and sustainable safe food.
Mr Bruton said the Government had introduced powerful new investigation and enforcement powers through the CCPA to help ensure fairness between suppliers and retailers in the grocery goods sector.
“There is potentially a real inequality between these players which can be abused in a manner that is not in the interests of jobs, consumers or sustainable safe food,” he said, noting that regulations will guard against that happening.
He said relationships will continue to be based on commerce and that prices will continue to be set by hard negotiations — in the interests of consumers.
“However, new legal provisions will require that in future, contracts must be in writing, certain terms must be included, records must be retained for inspection and a compliance statement must be made. These measures, together with strong enforcement powers, will ensure that these relationships are fair and sustainable,” he said.
The act gives the minister power to make regulations to specify certain procedures that must be followed in commercial relationships between undertakings in the grocery goods sector. It is aimed at preventing certain practices such as unilateral alteration of contracts by retailers, requiring ‘hello money’ for space on supermarket shelves, suppliers being required to bear the cost of promotions by retailers or for wastage or shrinkage.
Explanatory notes issued by the minister point out that the introduction of any regulations does not, and cannot, guarantee anything in relation to the prices received by any given link in the supply chain.
Negotiations on price will remain an issue between the contracting parties as happens in any commercial relationship. What the new regulations are intended to achieve is to regulate certain practices, not set prices.
The submissions from stakeholders will be examined with a view to drawing-up a final set of regulations which the minister said will come into force during 2015.
Irish Creamery Milk Suppliers’ Association deputy president Pat McCormack said the publication of the regulations for consultation was welcome and he did not doubt Mir Bruton’s bone fides. But he felt meaningful rebalancing of the EU’s food supply system back from the retailers and towards farmer–producers would only work if it originated and was supervised by the European Commission.
The Irish Cattle and Sheep Farmers recently met with Mr Hogan in Brussels,and called for regulation and examination of margins in the retail food chain which apply to key farm products.
Patrick Kent, president, said there must be transparency around how the profits from key products like beef, lamb and dairy are shared between farmers, processors and retailers. He called on the EU Commission to introduce a pan-European regulator with power to audit the whole retail chain and discern whether there was a fair share of margins allocated to all parts of it.
