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IFA calls for regulation to prevent cheap selling of fruit and vegetables

Staff writer |
Speaking during a presentation to the Joint Oireachtas Committee on Agriculture, IFA Vegetable Chairman Matt Foley said the current imbalance of power in the food supply chain is unsustainable for the vegetable and fruit family enterprises in Ireland.

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He said the vulnerable vegetable sector is under particular pressure from the retailers and will not survive the price war if the Government does not address this issue.

"The Horticulture Sector has a farmgate output of €395m of which edible horticulture accounts for 85% and the remaining 15% is amenity horticulture.

"While a relatively smaller sector within agricultural, Horticulture makes a hugely important contribution to our economy and rural society with an estimated 6,000 employed full time in primary production, with a further 10,000 employed in downstream businesses.

"In 2013, the retail fresh produce market in Ireland was worth €1.2b with vegetables accounting for €500m, Fruit €550m and Potatoes €150m. Fruit and Vegetables combined represent 14.5% of the average grocery shopping basket and are purchased in 51% of all visits to grocery shops, Foley said.

"In general terms, production levels from the edible horticulture sector have been maintained albeit the number of producers have fallen and continue to fall, as these family businesses are constantly challenged by their weak bargaining position in the food supply chain.

"The single biggest threat to our industry is the dominant position of the large retail groups in Ireland who are forcing down the prices paid to food suppliers, in many cases to below the cost of production.

"The retail market in Ireland is characterised by the concentration of 95% of buying power in the hands of five retail groups – almost 80% market share controlled by Tesco, Supervalu / Centra and Dunnes, and a further 15% by Aldi and Lidl.

"Both in Ireland and at EU level, it is widely recognised and accepted that there is a major imbalance of power in the food supply chain between retailers as price setters at the top of the chain and primary producers as price takers at the bottom.

"This imbalance of power in the food supply chain has resulted in a situation where farmers are sometimes compelled to accept unreasonable conditions and prices that do not cover their costs or provide an economic return.

"Vegetable growers cannot continue in an environment where their produce is constantly being used by retailers as ‘loss leaders’ and being offered to consumers for way below the cost of production.

"An example of this is the ‘Super Six’ weekly promotion in Aldi at which fruit and vegetables are sold between 39c and 49c. Similar promotions are replicated in the other multiple retailers. For the average grower, the cost of producing carrots is 55c/kg, swedes 53c/unit and cabbage 52c/unit.

"Below-cost selling is the main threat to the sustainability of Irish Horticulture. While promotions have always been a part of retail sales, the practice of below cost sales has brought a new and potentially terminal threat to our sector. Our vulnerable sector is under particular pressure from the retailers and will not survive the price war if the Government does not address this issue", said the Chairman in his presentation."

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