Mr. Tim Cullinan:

I thank the Chairman for the opportunity to appear again before the committee. I am joined today by the IFA's director general, Mr. McDonald, and our retail policy executive, Mr. Malone.

The IFA welcomes the publication of the scheme of the Bill and its proposal for the establishment of an office for fairness and transparency in the agrfood supply chain, as committed to under the programme for Government. The association has long advocated and lobbied for greater regulation and transparency to be brought into our food supply chain. It is farmers, as the primary producers of food, who are the weakest link at the bottom of this supply chain.

In Ireland, we have implemented the EU directive on unfair trading practices, UTPs, as required, and this function is being carried out by the enforcement authority within the Department of Agriculture, Food and the Marine. It is clear there is a need for an independent body to carry out the role of ensuring compliance with the UTP directive. The directive has been carefully considered at length by our elected EU representatives and it is a positive step. We must now ensure that we strengthen this proposed legislation and strengthen the legal powers of the new office for fairness and transparency in the food chain beyond the scope of the UTP directive.

The IFA welcomes the opportunity to make a submission and meet with the committee today. We have referenced a number of amendments and additions in our submission that we would like to see included before the Bill progresses. In order to strengthen the legislation and allow for a more equitable position for farmers in the food supply chain, the IFA is seeking the following additions to the Bill: a ban on below-cost procurement of food, a ban on below-cost selling, security for suppliers in all tendering processes, stringent rules around retail food price promotion, minimum dedicated shelf space of at least 30% for branded food products, a prohibition on the use of non-approved logos, particularly the use of the Irish flag, and a prohibition on fake farm brand names created to mislead the consumer. We are also seeking an assurance that the new office for fairness and transparency in the food chain will be up and running this year. I will now go through each of our requests in more detail.

There must be an additional UTP provision to prohibit the buying of food below the cost of production by food procurement managers in dominant positions. This needs to be clearly directed towards the retailers and main wholesale food service providers. The IFA proposes that independent published costs of production should be kept under regular review and should be enshrined in the Bill as a minimum price buyers can pay producers and suppliers of food. While not solving all problems, this inclusion will go a long way to preventing the dominant buyer from pricing farmers out of production, as has occurred in the horticulture sector for the past 20 years.

The IFA is seeking the reintroduction of a ban on the below-cost selling of food, as originally prohibited under the Restrictive Practices (Groceries) Order 1987. That ban prevented retailers from using food as a loss leader in their business. Selling food below the cost of production completely undermines our domestic food producers. The IFA commissioned a report into the Irish horticulture sector in February 2022, entitled Retail Price Compression Threatens the Viability of Irish Horticulture, which shows that over the past 11 years, the average price of food fell by 9%. In 2013, in the period before Christmas, a number of retailers discounted fresh vegetables to 5 cent a kilogram to attract footfall into their shops in the lucrative Christmas period. Without protesting demonstrations by growers, organised by the IFA, that practice would have continued and gained traction, likely leading to the complete elimination of the Irish horticultural sector. Reintroducing a ban on below-cost selling will, in particular, give stability to the current cohort of very vulnerable growers of Irish fruit and vegetables. Do we want a situation where, Ireland, as one of the most fertile crop-growing countries in the world, must import all its fresh fruit and vegetables?

Tenders from the retailers to secure supplies of food from farmers and growers should be multi-annual in nature, providing insofar as possible greater certainty and support against the impact of the unpredictable seasonality of food production. Mechanisms should be provided within existing arrangements to facilitate continued engagement, negotiation and reward terms or price in exceptional circumstances and unforeseen market dynamics, including an agreed lag period to their implementation when relevant. Terms must be agreed in advance of annual planting of the crops.

Where a retailer engages in any discounts on agrifood products as part of a promotion, the retailer shall, prior to a promotion, specify the period of the promotion and the expected quantity of the agricultural and food product to be ordered while the promotion is on. Promotions must be clearly funded by the retailer and not by the supplier.

The IFA calls for the inclusion of a minimum dedicated shelf space of at least 30% for branded food products. Premium branded food selling at a higher price to consumers will result in a greater price being passed back down the food chain to the farmer. It is clear that where a retailer does not offer branded food to the consumer, the farmer receives less.

The association calls on the Minister for Agriculture, Food and the Marine, Deputy Charlie McConalogue, to give the new office the power to ensure all retailers of agrifood only use Government and agency approved logos, such as the Bord Bia Quality Assurance Mark and the National Dairy Council logo, to indicate the Irish origin of produce. The Bill must include a prohibition on use of the Irish Tricolour and other self-created logos in the likeness of the Irish flag that may confuse the true provenance of products.

Retailers of food must be prohibited from creating fictional "fake farms" to sell their own branded food. These fake farms could be misleading to the consumer and be interpreted as being of local origin, which may not be the case. The IFA raised the use of fake farms by food retailers in 2021. The use of “Coolree Creamery” by Lidl and “Clonbawn Irish Dairy” by Aldi to sell their own private label milk was publicised by the association in 2021. An application made by Lidl for a court injunction prohibiting IFA's continued exposure of these fake farms was rejected by the High Court.

We have watched with great interest the committee’s previous sessions on the Bill with the Minister and his officials from the Department of Agriculture, Food and the Marine, and enforcement authority and the committee's meeting last week with the Competition and Consumer Protection Commission, and Retail Ireland.

Greater fairness and transparency is at the core of the Bill and the reason it is needed is the imbalance of power in the food supply chain. Farmers, the primary producers of food, are unquestionably the weakest link in the supply chain. As John F. Kennedy famously said, “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” This is still true today and the Bill must go a long way to change this.

Major retailers at the top of today's food chain and a small number of large food service providers currently hold the power in Ireland’s food supply chain. This power leads to an inequitable distortion of value being distributed down to primary producers of food. The Bill needs to specifically call out where the current power imbalance lies, and state that this is where the focus of the new office will be directed.

The IFA is calling on the Minister and the Government, to include a stated focus on five major retailers and main food service providers as the initial primary focus of the new office. The IFA commissioned a report in February 2022 by the economist, Mr. Jim Power, on the retail price compression and how it is threatening the viability of the Irish horticultural sector. The report showed that over the past 11 years, the average price of food fell by 9% while the overall consumer prices increased by 13%. This report states that the retail price compression experienced in the horticulture sector has resulted in the current market failure. If the issues associated with the price compression are not addressed, the vegetable growing sector, in particular, will continue to contract. There has been a constant decline in vegetable grower numbers from approximately 377 in 1999 to today’s estimated number of 100 commercially viable growers.

It is imperative the analysis and reporting function includes proper value chain analysis which outlines what portion the primary producer is receiving. We must see where the money is going. The IFA is calling on the Minister to enshrine the responsibility of the new office to investigate the value trail in the food chain and where unfairness is clearly reported, ensure immediate action is taken to rectify it. The association suggests monthly reports publicised with at least quarterly information seminars, both online and in-person, to assist in dissemination of the data to stakeholders down the food chain. This analysis should also include data on the percentage share of the food value chain that is returning to the primary producer.

The IFA submission to the committee sets out a number of specific observations regarding the legislation currently under consideration. All of those are documented in our statement so I will not go through them again. I thank the Chair and the committee for the opportunity to present here this evening.