Stephen Cadogan: Phil Hogan urged to keep price promise on produce margins

ICMSA has put pressure on the European commissioner for agriculture and rural development, Phil Hogan, to live up to his promises to level the playing pitch for farmers, versus what the dairy farmers’ organisation calls “margin-grabbing” retailers.

Stephen Cadogan: Phil Hogan urged to keep price promise on produce margins

ICMSA president John Comer said he feared the Commissioner must have been confronted by the overwhelming powers and lobbying of the food retail corporations, and has been converted to the fantasy that voluntary codes organised on an individual national basis would be enough to rectify abuses.

In April, Mr Hogan again acknowledged that Europe’s food chain is “broken”.

He said globalisation brought trade benefits, but could also have the negative effect of concentrating bargaining power in the hands of the food-processing and retail sectors.

He said farmers must not continue as the weakest link in the chain. But it seems EU efforts to improve the functioning of the food chain must apparently wait at least until next autumn’s agricultural markets task force recommendations of changes in EU legislation to improve balance in the supply chain.

Established by Mr Hogan, the task force is examining issues and topics such as transparency, collective self-help tools, access to financing and futures, contracts and contractual relations.

Their report next autumn will come much too late for 162 food companies in Britain which became insolvent in 2015.

The insolvencies figure comes from accountancy firm Moore Stephens, which says the rate of British food suppliers going bust has tripled in the past five years, which Moore Stephens blames on supermarket pricing wars.

Britain is the poster child for Europe’s “broken” food chain, after 18 months of falling prices in an ongoing supermarket price war, sparked by the growth of German discounters Aldi and Lidl.

With over 70% of British food suppliers’ produce going through the country’s top 10 supermarkets, the food industry and farmers who depend on it are falling victims of the price war.

Dairy farmers may have been hit hardest, with Britain’s National Farmers Union saying supermarkets have deliberately devalued milk, just to get customers through the door.

But Irish beef farmers could feel the pinch too, with the co-operative supermarket chain pledging to cut the cost of over 200 of its own-brand, British-sourced meat and poultry products, by an average of 10%, but up to 50% in some cases.

That could drag down prices for the 54% of Irish beef exports which go to Britain .

It could also affect prices for the 61% of Irish pigmeat exports and 28% of our sheepmeat trade which go to Britain.

It’s easy to see who is winning the food chain wars in Britain, with 162 food production firms going bust last year, but Aldi planning to open 80 new stores this year in Britain, and Lidl outlining plans to open 280 stores in London and the M25 area.

With such evidence of the food industry losing out, it’s no wonder that ICMSA’s John Comer has pointed the finger at what he suspects is EU unwillingness to regulate retailers and to ensure fair treatment and wages filtering down to farmers.

Mr Comer warned that cheap food is ruinously expensive for farmers, and said Mr Hogan has joined the long, long, list of commission personnel who talk about fairness in the food supply-chain, but switch to talk of “voluntary initiatives” when push comes to shove.

He said any suggestions that member states acting alone could exert pressure on multinational retail corporations with turnovers often greater than state revenues were laughable.

Mr Hogan was welcomed as the guest speaker at ICMSA’s AGM last December, but the welcome has worn off as hard times continue for dairy farmers, and the finger is pointed at retailers as the villains.

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