Oireachtas Joint and Select Committees

Thursday, 9 May 2013

Joint Oireachtas Committee on Agriculture, Food and the Marine

Groceries Sector: Discussion with Lidl Ireland

10:10 am

Mr. Ryan McDonnell:

Not at a shop level. Our model is based on simplicity and cost efficiency. Breaking it down to store level would not suit our model but we would not rule out having regional supply.

On the buying strategy for milk, we have 100% National Dairy Council milk across our 1 litre product. We receive milk from a supplier in Northern Ireland across our 2 litre product but it is from farms north and south of the Border.

Lidl is actually mid-tender at present and with the sensitivity around that, I reiterate and restate that we are 100% committed to buying Irish where possible. On the volatility regarding input costs and concerns of the IFA in respect of winter milk and the sustainability of supply, Lidl is very mindful of this and engages regularly with its suppliers and with the IFA, where possible, to understand the broader crisis, if that is the case, within a sector and we are responsible in that respect. The opening statement in our code of conduct is "Our approach towards business partners is competitive and fair" and this is how we approach all our buying negotiations and contractual negotiations. Deputy Ó Cuív asked for quite a lot of detail concerning the number of suppliers broken into categories. I will not reel that off as I do not have it to hand but we will be happy to furnish the Deputy with that information afterwards. The Deputy also asked a specific question regarding fresh or unprocessed produce, that is meat, poultry, fish, fruit, vegetables etc. I reiterate that 100% of our Inisvale Irish beef is Bord Bia approved and certified, as with our lamb, pork and fresh chicken. Our fresh fish, where possible, will be sourced in Ireland but we have a broad range of fresh fish products which, naturally, we must import, depending on source. On the further detail regarding how many suppliers there are in each category, we can furnish the Deputy with that information.

I wish to revert to Deputy Barry's question on our knowledge of input costs or how close we are to input costs and whether we are mindful of the margin received by producers. As stated in the opening statement, Lidl does not primarily deal directly with producers and growers but we do have some suppliers who are involved in primary production. As a purchasing division, we would not be doing our job if we did not understand the components that make up the buying price on which we agree contractually. Consequently, to be well-informed and educated on what makes up our buying pricing is part of our job. As for fairness, in a turbulent commodity market we are extremely mindful that it has been a very difficult trading environment in the past 12 to 18 months across the board, whether it is feed related or potato growing, and we will interrupt contracts where there is verifiable reason for so doing and will entertain renegotiation on price. Again, fairness and being in touch with the commodity markets are vital within our purchasing division.

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