Mr. John Bryan:

I thank the Chairman and members of the committee for giving the IFA the opportunity to make this presentation. As the Chairman is well aware, it is a presentation I have made on several previous occasions. When he was Fine Gael spokesperson on agriculture, we meet him on several occasions. Deputy Martin Ferris is probably tired of looking at me in coming here to make presentations on this matter. This legislation has dragged on for so long that I am concerned about the commitment made on the part of all those concerned to progress it.

Farming and the food industry make a hugely important contribution to the economy and rural society, something that has become more apparent during the economic downturn. It is an export-driven industry, with the volume of exports growing to a record €9 billion last year. Farming, the food sector and related service industries maintain an estimated 300,000 jobs in the economy and contribute to economic activity in every parish and town in Ireland.

The report recently commissioned by the IFA and undertaken by the UCD professor of agriculture and food economics, Mr. Alan Renwick, on the cattle and sheep sectors shows how embedded primary agriculture is in the local economy. Farming and the agrifood sector have the potential to capitalise on growing global demand for sustainably produced food products and further increase employment and exports.

The Government's Food Harvest 2020 food targets are ambitious. Farmers are willing and able to increase production but only on the basis that they will be fairly rewarded for their work and investment. A major threat to realising this objective is posed by the reality that primary producers are not getting fair play in the food supply chain and that their viability is being seriously challenged, both in domestic and European markets. The dominant position of the large retail groups in Ireland and across the European Union is widely recognised and forcing down the prices paid to food suppliers to below cost of production levels, in some cases. For example, liquid milk producers are receiving 33 cent a litre, on average, with production costs near 40 cent a litre. The food supply chain in Ireland, in our main export market, the United Kingdom, and most of Europe is characterised by the concentration of buying power in the hands of a small number of very large and powerful retail groups with significant market share. In Ireland almost 80% of the retail grocery trade is controlled by three players - Tesco, Musgraves and Dunnes.

Farmers are very disappointed at the delay on the part of the Government in the publication of the consumer and competition Bill which is to include a statutory code of practice for the grocery goods sector. The two Government parties made a big play of this issue in the run-up to the general election over two years ago. The programme for Government committed to "enact the Fair Trade Act, which will ban a number of unfair trading practices in the retail sector such as "hello money" which suppliers have to pay to secure a place for their goods on supermarket shelves". The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, gave the IFA a personal commitment and made repeated promises that the legislation would be prioritised for publication, first, before the end 2011, then in 2012, followed by before the end of 2012. I understand the legislation has been "A listed" for Government approval since last autumn and the Government's inaction in the matter is unacceptable.

The inability of the Government to address the serious inequities in the food supply chain is putting primary producers under severe income pressure and some processors are in danger of being forced out of business.

Demands by retailers for large sums of money for promotions, shelf space and discounts from suppliers are adding to this pressure, and are totally unacceptable.

The IFA supports statutory legislation to address the imbalance of power in the supermarket-supplier-producer relationship and to deliver more equity in the food supply chain for the primary producer. The IFA believes that all stakeholders in the food supply chain should be covered by the code, but it must specifically focus on targeting retailers to secure equity in the chain, right back to the primary producer.

The code must ensure that retailers have responsibility for ensuring their pricing and purchasing decisions do not impact unfairly on primary producers; prevent below cost selling and predatory pricing practices; ensure a fair system of procurement for Irish products; guarantee that contracts between retailers and suppliers do not include provisions to support retailer promotions or discounting; set a limit on the use of own brands by retailers; address the credit terms between suppliers and retailers and provide for no more than 21 days credit; include a provision for "retention of title", which should be automatic until goods delivered are paid for in full by retailers; oblige retailers to report details of their profitability and turnover in this country; put substantial penalties in place to guarantee that retailers comply with the code; and insist on proper labelling of produce, avoiding any confusion or misleading of consumers.

Along with a statutory code of practice, the Government must legislate for an independent ombudsman's office which would have legal powers to investigate and adjudicate on the relationship between producers, suppliers and retailers; act in the public interest and in pursuance of the code of practice, ensuring farmers are not forced to produce below the cost of production; demand information from retailers as part of their investigations; provide anonymity and confidentiality to suppliers who make complaints, initiate investigations; and enforce penalties for non-compliance and abuse by retailers.

The Chairman has already had an in-depth discussion on EU legislation. I attended a meeting in Brussels last week at which Commissioner Barnier spoke. He was clear in his intention to introduce a statutory code in the long run that will introduce transparency and ethics - two things about which I have serious concerns. I indicated that retailers do not publish their profits or margins which means transparency is lacking. We will have a job to get ethics included in a code. The UK would regard itself as the major free-trader in the world. I am surprised that its retail legislation is way ahead of this country. It is time we made a serious effort to catch up.

Farmers are highly regulated and the relentless downward pressure on their margins from the retailers is not sustainable if they are to continue to produce high-quality, safe food for consumers. Product price and input cost volatility remains a constant challenge for farmers today, with product prices varying across the commodities in 2012, while input costs rose across the board, on top of a major cost increase experienced in 2011. The horrendous weather conditions of the past 12 months led to an increase in the volume of inputs consumed, particularly feed and energy, which further added to the cost of production.

While product prices have been largely positive over the past two years, it is not sufficient to provide farmers with a viable income as input costs have increased at a greater rate. Since 2005, the major input costs for feed, fertiliser and energy have increased by between 40% and 65%. The price being returned to producers does not cover the increased costs and the retail multiples must reflect the reality by returning higher prices back down the chain.

Irish consumers want to buy Irish produced products. The Bord Bia quality mark provides consumers with independent assurances of identification and traceability. Research carried out by Bord Bia clearly shows that is the case. The IFA continually monitors Irish retailers’ shelves on the basis of their self-acclaimed commitment to locally-sourced product. The Government must close the loopholes in the labelling legislation, which are misleading consumers and short-changing producers. Irish farmers are proud to produce food in an environmentally sustainable way, to the highest standards of traceability, quality, safety and animal welfare in the world. Lessons must be learnt from the horsemeat DNA episode and it is clear that there must be stricter controls on secondary processors, particularly in relation to imports.

The IFA’s position is as follows: any serious breach in regulations or lapse in standards that results in damage to the reputation of the Irish food sector should lead to proportionate penalties where one is guilty of an offence, including the possible loss of a licence for the processor involved; the Department of Agriculture, Food and the Marine must introduce real transparency in the supply chain and should publish the names of companies importing meat and the volumes involved on a monthly basis; only Irish raw materials should be used in meat products that are labelled and sold as Irish; and clear and accurate labelling must be implemented right across the food chain to include the retail sector, butchers, food service and restaurants. Proper compliance with the regulation would guarantee full traceability on all meat.

Irish farmers are extremely disappointed that the Food Safety Authority, FSA, has not implemented the legislation on beef origin and labelling across all food outlets in Ireland. I call on the committee to pursue this issue. The over-riding principle is that food labelling must, first, serve consumers by upholding their right to clear and straightforward information on the origin of product, and, second, it must safeguard producers by ensuring transparency and fair competition from imported product. To give the consumer an informed choice on all meats, similar to that currently available for beef, the Government must legislate so that there is an obligation on all food business operators, retailers and the entire food catering and service sector to state where their product is produced. The legislation must then be backed up with proper enforcement across the entire sector.

I call on the committee to support the IFA’s position on the urgent need to regulate the retail sector on grocery goods. The current imbalance of power in the food supply chain is unsustainable for the family farm structure in Ireland and across Europe. Vulnerable sectors, such as liquid milk, horticulture, pigs and poultry, are under particular pressure from retailers and will not survive the price war if the Government does not take action. Retailers must review their race-to-the-bottom, lowest price policy, in order to ensure acceptable standards and quality are always maintained for consumers, and producers are paid a fair price which reflects production costs plus an acceptable margin.

The Government and the EU Commission must accelerate their plans to regulate the sector, as farm families are not recognised or fairly rewarded for their role in the food supply chain. The legislation is required urgently. People are being pushed out of the sector due to pressure from major retailers. We would like to see legislation introduced and treated in the manner it deserves. In the past we failed to regulate the banks and the entire economy is paying for it. The second most powerful sector in the economy comprises the major retailers. Our failure to regulate them is evident at this stage. It is time that we stopped talking about the issue and took strong action. I urge the committee to put pressure on both the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the Minister for Agriculture, Food and the Marine, Deputy Coveney, to address the legislation as a matter of urgency.