Ms Edel Clancy:

I thank the committee for the opportunity to speak today, and we are very aware of the important work that the agriculture committee is undertaking. We would like to make a positive contribution to the work and I hope our comments will help. We would be very happy to follow up afterwards in the event of additional questions that members wish to put to us.

I have two colleagues, Mr. Ian Allen from Musgrave and Ms Breda Cahill, who is an independent retailer in Dublin. Ms Cahill will speak later about what it is like to be an independent retailer in today's environment. I will begin by explaining a little about Musgrave and the unique relationship we have with independent retailers around the country. Musgrave is a family business, founded in 1876 in Cork, where we still have our headquarters. The company was founded by two brothers, Thomas and Stuart Musgrave, and the family ethos prevails throughout the company. We see ourselves as a family business supporting other family businesses around the country working in the local community, such as that owned by Ms Cahill. Between ourselves and our retail partners in Super Valu and Centra, we employ approximately 30,000 people. That means we are the largest employer in the State after the Government.

These employers are in local communities in urban and rural areas. Often, our retail partners are not only the largest employer, but they may sometimes be the only employer in an area. This is a responsibility that they and we take very seriously. An independent retailer owns his or her store and it is his or her name over the door.

That individual lives, works and socialises in the community. There is a unique partnership. Independent retailers have expertise in supply chain, information technology and logistics, which is magic dust, and they develop the offer to suit the needs of consumers in their areas. A SuperValu in Clonakilty will be very different from a SuperValu in Wexford. We encourage the unique and individual contribution our retailers make. It is important, not only for us but also for policy makers and others, to support small businesses in local communities and economies. They will be at the forefront of the economic recovery and it is in all our best interests to support them.

We also support local suppliers. We have long-term relationships with more than 600 suppliers throughout the country. We work with them in the long term. I will say more about that later. About six years ago, we developed a supplier development programme. This gives small suppliers who have been identified by ourselves and Enterprise Ireland an opportunity to develop their technical skills in distribution and so on. They also benefit from mentoring, advice and ongoing discussion with experts. For any small business this is as important as the funding it needs to survive. We have applied what we learned in the six years of the supplier development programme to a retailer and farm development programme which we launched last year. Its purpose is to develop the long-term sustainable profitability of farms. Already, ten farms have signed up and are working on the programme. We hope they will, in turn, become mentors to next year's cohort of farms.

These are examples of our commitment at a local level. Members of the committee will know we have strong links with TidyTowns and the GAA. When we launched our GAA sponsorship Micheál Ó Muircheartaigh said it was a marriage made in heaven. This is not surprising, when one considers that Musgrave has been around 20 years longer than the GAA. We have similar roots in local communities.

I need to say something about how hard our retailers and we are working to ensure that consumers get the best price. It is no surprise to anyone that consumers are looking for value and are shopping around. It is essential that we provide them with the most competitive price while maintaining our support of suppliers.

I will go on, Chairman, to some of the issues the committee asked us to address. I have spoken a little about our local support but I will mention some specifics. We buy 100% fresh Irish beef, lamb, pork and chicken. In SuperValu and Centra we are committed to supplying 100% National Dairy Council, NDC, approved milk. We want to maintain our Irish supply chain. It is quintessentially part of the Musgrave brand and of our retail brands. It is not a marketing tool. It is part and parcel of who we are.

We run Irish producer awards which acknowledge the contribution producers make, both to our brands and at a local level. We encourage people like Ms Breda Cahill and her colleagues to look for local suppliers and to find products that are not available elsewhere. Ms Cahill and her colleagues spend more than €75 million on such products every year.

The issue of the impact of pricing on primary and secondary producers needs to be prefaced by some discussion of the current difficult economic times. According to the Central Statistics Office food prices have dropped by 6% since 2008. We, in Musgrave, and our retailers are investing in price reductions. We are reshaping our own businesses and looking for cost reductions wherever we can in order to invest in price reductions for consumers. Own brand products are part and parcel of today's shopping basket. They make up about 35% of the average basket and that figure will probably rise.

We are not against a code of practice. Having looked at the draft code, however, we believe greater balance between suppliers and retailers is required. Sometimes an impression is given that all suppliers are small, which is not true. We deal with big international suppliers several times the size of our company. There needs to be balance in the drafting of the code of practice. We think a voluntary code of practice is a better way to go. If the various players in the supply chain agree to the principle of a code it will have a better chance of sticking. We are supportive of the European code. There is some frustration at the speed with which the European framework is being implemented. However, the principles have been agreed across the supply chain at a European level and the detail is imminent. We should give a European code a chance. As the recent horsemeat controversy has shown, supply chain issues do not stop at national borders.

Finally, I will say a couple of words about labelling. The horsemeat issue has raised the importance of the provenance of food. We have invested heavily in our quality auditing and traceability systems. They are important to us and, thankfully, they have been validated in the past few weeks. We will continue to invest in those traceability systems. It is important to ensure that consumers have trust in the food they are buying and eating. To that end, we are in favour, in principle, of the country of origin proposals that have been put forward.

I will leave my opening remarks at that and I am happy to take questions.