Food prices out of line - Producers, consumers lose out

THE European Union confirmed yesterday what all of those who cross the border to shop in the North have known for some years — Irish food, tobacco and drink prices are amongst the highest in Europe.

Eurostat yesterday published a report based on 2009 prices that showed Ireland was the second most expensive of 27 countries when the price of approximately 500 comparable products was reviewed. Only Norway was more expensive.

Though food prices have fallen somewhat in recent time, consumers, food producers and farmers will be equally perplexed by this report. Consumers because they pay so much, farmers and other food producers because they are paid so little.

In a country where farm incomes are at a 10-year low, it is hard to understand why food prices should be so out of line with the majority of European countries.

Farmers have warned that most of the food they produce leaves their farms without covering the cost of production.

Teagasc reported last month that average farm incomes in 2009 were just €11,986, their lowest level in 10 years. When figures were adjusted for inflation, farm incomes are 43% below 1995 levels.

Though our food and non-alcoholic drink prices are between 10% and 30% higher than the EU average, our mean price goes spectacularly out of kilter when tobacco and alcoholic drinks are included. Our tobacco prices, deliberately inflated as a health policy, are 217% of the EU average.

Irish alcohol prices at 167% are the second highest in the 27 countries considered. Only the Finns pay more for drink. Nevertheless, our food prices are considerably higher than they are in most EU countries and this discrepancy should be addressed.

The proposal to appoint an ombudsman for supermarkets might have been one of the ways this imbalance might have been addressed.

However, after considerable lobbying, it is expected that supermarkets will not be obliged to observe any code of practice regarding pricing, hello money or under-the-counter payments.

Compliance will be on a voluntary basis. Effectively, the office has been rendered redundant even before it is established as recent history shows that business will only do what it is forced to do.

Tesco, Superquinn and Lidl all vigorously opposed plans for a code of practice which was aimed at reducing the power of big retailers and suppliers to control prices. Unsurprisingly, the farming bodies and representatives of suppliers and manufacturers support the idea.

We are already paying the price for allowing banks become too big to fail and it seems we may be at that point with some of the multinational food retailers and processors too. As it was with the banks, governments may find that they have fewer options than we might imagine in this never-ending tension between consumers and big business.

However, there are many options at a local level and it may be time too to revisit the principles and objectives of the co-operative movement founded almost a century and a half ago by Sir Horace Curzon Plunkett.

Peak oil and our need to re-establish food independence add to the urgency surrounding food and food pricing issues.