Oireachtas Joint and Select Committees

Thursday, 9 May 2013

Joint Oireachtas Committee on Agriculture, Food and the Marine

Groceries Sector: Discussion with Lidl Ireland

9:40 am

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I welcome our guests. As they are probably aware, there has been much debate both here and elsewhere about the relationship between major retailers, processors and primary producers. They will appreciate that as a committee with responsibility for agriculture, we are extremely concerned about primary producers. We are of the view that in the context of such producers, it is extremely important to have sustainable agriculture which is profitable. If one is not in business to make profits, one is not in business at all. As the position changes at European level, it is very important that farmers obtain a fair price for what they produce.

I wish to pose a number of specific questions. Do I understand from the presentation that individual Lidl stores do not buy locally and that everything goes through the main distribution centre? In other words, if a supplier's products are in one store, they are in all of them. However, it is not possible for a supplier to get products into a single store. Some of the other supermarket chains have indicated that they allow local buying, which is extremely important for those who produce vegetables, fruit, niche artisan products, etc. Will Mr. McGrath clarify whether Lidl has an all-in-all-out system? Is it correct all products go through the central distribution system and that suppliers either get them into all of the stores or none?

The committee is learning from the process in which it is engaged.

In the context of the code, in terms of suppliers and primary producers, it has come to the fore that there is a huge difference in the nature of Lidl's food suppliers and processors. Mr. McGrath might break that down into three headings. One is fresh foods such as meat, milk poultry, fish - if Lidl sells fish, eggs, vegetables and fruit which do not involve any significant processing. For example, a leg of lamb is a leg of lamb. How much of Lidl's products that can be grown in Ireland are sourced from here? In other words, oranges are not grown here and while Lidl might buy oranges from an Irish supplier they are not Irish oranges. How much of the milk, poultry, eggs and vegetables it sells are sourced within this State? Can Mr. McGrath give us an indication of the number of suppliers Lidl would have for those types of products?

The next tier down is processed foods such as cooked meats, breads and so on which are not greatly processed and which are produced by smaller suppliers. Presumably Lidl sources most of its bread, cooked meats such as ham and so on within the State. How much of those products are sourced in Ireland? There are the very processed foods which would be divided between the small producers Mr. McGrath mentioned and the big operators. If it is in order to mention brands such as Kelloggs, Proctor and Gamble and all of those who can look after themselves, I am sure the relationship between Lidl and those is equal and balanced and we do not need to fight their battles for them. It is important that we get a sense of how that breaks down because there is a certain element of chalk and cheese in terms of those relationships. I would refer to value and volume as opposed to the number of suppliers in the context of the third category and presumably the vast majority of those types of products come from the major multinationals.

Many of the supermarkets chains that have come into this country has said that they have no problem with the European Union code but they would have a problem with the Travers code, as proposed, or the British code. Could Mr. McGrath outline whether it is the mandatory nature of one of those codes that is the problem and compliance cost or is there something in the British code and Travers code that causes major difficulties for Lidl? Do those difficulties relate to, for example, the compliance cost in terms of the major multinationals with which Lidl deals?

Does Lidl source its milk in the Republic or is it imported from Northern Ireland, if it is cheaper there, or has it a policy on milk purchases other than buying the cheapest on offer? I have received many complaints from milk producers, and these are genuine complaints, that if the current pricing policy continues with some of the supermarket chains - I will not name here and I am not necessarily saying that there is a problem in the case of Lidl - we will run short of milk. We will have to talk to the National Milk Agency about this. That agency was established to ensure that we would have a supply of milk 52 weeks of the year. I am told that is a concern in this respect arising from the current policies being followed by the multiples. Does Mr. McGrath accept that the misbehaviour, as I would call it, or the pressure being exerted by some groups of multiples could cause difficulties for the remainder in that to stop abuses, as I would term them, we might have to bring in codes of practice that would impinge on the cost bases of the remainder, the ones that have a high standard and a fair code of practice?

We have moved largely towards labelling displaying the contents of products but we can go further than that with labelling. There are four elements to labelling. Lidl can have its own brand and that is fair enough. If it wants to put the name of the supermarket on a product I do not see a problem in it doing that. The second element is that all ingredients over a certain volume would be displayed on a label and displayed in an understandable way. The third element that seems to be omitted, and it is one that fascinates me, is that there is no requirement to show the processor's name on a label. We talk about tracing food back to the to the farm gate but in many cases we cannot even trace the product back to the processor. If one buys 2 litres of milk, one does not know its producer except that it is has come from Lidl. What would Mr. McGrath's view be on the introduction of legislation requiring the display on a product of the processor's name as a first step? It would be even better if the farmer's name was displayed on it, in order that the customer would know the processor of the product. The final element displayed on labels is the energy values, calorific values and so on. In the case of milk, the ingredient would be displayed which is simple in that it is milk, and the label would contain the calorific and energy value and so on, the name of the processor and if a supermarket wants to put its own name on it, that is fair enough. What would the view of the trade be on that?

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