Ned O'Keeffe (Cork East, Fianna Fail)

I am delighted to have the opportunity to speak on this Bill which deals with an area close to my heart. Given my background in the food industry, both as a producer and in the context of my role in the Department of Agriculture and Food, it is an area in which I have first-hand experience.

It is important to record some general observations at the outset. I differ from my colleague, Deputy Lynch, with whom I sit on the Joint Committee on Enterprise and Small Business, with Deputy Hogan, and I compliment the Minister, Deputy Martin. It was an all-party committee that came up with the final result. I must praise the Minister, Deputy Martin. He inherited this legislation, but I believe he would not have produced it if he had been in the Department from the time the Government came into office. The Minister, Deputy Martin, is an innovative, modern and successful Minister who has done great work in all areas. However, I question his knowledge of the groceries order and the Irish food industry.

I compliment Deputy Cassidy, the chairman of the Joint Committee on Enterprise and Small Business. He is an innovative Chairman who runs a successful committee and challenges many areas and reports before the House. The report on the groceries order was a comprehensive document but it has been ignored by many in high office and positions. If it had been taken on board, we would not be here discussing this legislation which will destroy not only our retail sector but also our small food industry. Bord Bia and IBEC would agree with me with regard to this legislation. It is legislation the Minister has inherited that will make the rich richer and the poor poorer.

The food and retail sectors here have special importance in the State. For a country that is primarily a producer of food, the output of the food and drink industry is a significant contributor to our GDP. Currently, the agri-food and drinks sector account for more than 8% of Ireland's GDP, 8.4% of our exports and 9.1% of total employment. In employment terms there are nearly 110,000 people employed in agriculture and a further 47,000 directly employed in the food and drinks sector. In addition, there are more than 65,000 people employed in the distribution and sales of food in the retail grocery sector, with the lion's share of more than 40,000 employed in the independent retail grocery sector.

With in excess of 200,000 employees in total, the food and retail sector is a key and critical sector of our economy. It is also by its nature a labour intensive sector and one that has faced increased regulation from the EU. Increased regulation and high labour involvement inevitably lead to high labour costs. This has significant impact on competitiveness and the funds available for investment. The sector is volatile, given a high dependence on exports and a need for attractive routes to market in the home area.

I mentioned these aspects by way of background because it is important for us as legislators to understand the sometimes difficult market in which Irish food companies operate. We are not just talking about the large co-ops or food industries that have come to dominate key parts of the food market. There are many small and artisan producers, including many in my area, that have developed new and innovative products which they are anxious to bring to consumers. There are many small and medium sized food companies that benefit from supports from county enterprise boards, some of which will develop into more substantive production and manufacturing operations, supported by the Department — there goes another waste of taxpayers' money. It is important for such firms to have confidence in their dealings with retailers and that they are not subject to arbitrary, unjustified or unfair trading practices.

What will happen to the small retailers I have mentioned? The Minister of State, Deputy Michael Ahern, was in my town recently to launch three small units involved in the food industry. They have no more future than today's newspaper in that locality because they will not be wanted. Currently there is some friendliness from the large multiples towards small food manufacturers and cottage industries that make marmalades, jams and brown bread — something which is important to our tourists — and a range of other products. They may be a nuisance at the moment, but they will become a bigger nuisance when this Bill is passed. Whether they are in Cahirciveen, Waterville, Listowel, Mitchelstown, Cloyne, Dungarvan or wherever, they will be told that the multiples will accept certain products at their central distribution centres.

Therefore, Mrs. Murphy, or whoever, will be told to take her goods to the multiple's local distribution centre. How in God's name can someone running a small operation, with profits of €10,000 to €20,000 per year, whose produce is rightly acclaimed in his or her area, afford to travel to the central distribution centre? That has been the trend of the Irish multiples, especially the new ones coming to this island.

Large retailers are not charities and many use all means possible to extract the maximum saving from suppliers through the imposition of particular terms and conditions. We should never forget that we have a population of only 4 million and, bearing that in mind, we should note the three main areas of concern, namely, predatory pricing, the demanding of hello money and the abuse of credit terms.

The Financial Times is a paper of repute and is widely read not only in this country but across the world. I picked up a copy on Wednesday, 7 December 2005 and noted the following headline: "Cash benefit: how big supermarkets fund expansion by using suppliers as bankers". By God, the article has something to say on the matter. What have we done in this country of 4 million people? The article, written by John Plender, Martin Simons and Henry Tricks states: "Examining the accounts of multinational retailers shows the increasing extent to which they draw on trade creditors to provide working capital for their stores." Who read that article in the Department of Enterprise, Trade and Employment?

The practice of demanding hello money, the abuse of credit terms and the imposition of unfair trading terms can all have a seriously negative impact on any existing or fledgling supplier businesses. It is important that such companies have the confidence and assurance that their businesses will not be undermined by avaricious behaviour by multiples. While they should not be cosseted from competition, it is essential that they be given a fair chance to develop and expand so as to encourage innovation and employment. I hope this is an objective with which the Minister can agree.

It is also vital that we understand that relationships within the retail grocery trade are often skewed by the enormous market power that a small number of large retailers have over a multitude of suppliers, consumers and competitors. This is relevant to the cottage and small food industries in Ireland. Given that two major multiples in the grocery trade have over 50% of the market, the power of these companies in terms of giving new and existing suppliers routes to market is considerable. The potential for a large retailer to abuse that power is ever-present and needs to be watched and controlled for the public good.

It is also important for suppliers to have access to different routes to market and that they not be solely dependent on large retailers. There are many significant food businesses in Ireland that secured their first break through a local shop. This relates to my point on small manufacturing industries, which will be a thing of the past if this amending legislation is passed in its entirety.

Ensuring that there is diversity and choice in retailing is critical, not just to the provision of shopping facilities locally but also to the supplier and production base. Innovation and change are part of modern commerce and this is nowhere more evident than in the retail grocery trade. There are new forms of stores, stores of new sizes and new operators trading at a time that has seen the advent of Internet retailing and various other retail formats. At the heart of it all, there is still a special place for local, independently owned retailers, who trade in their own town, as members of a symbol group or otherwise, and who are part of the community in which they operate. They source goods locally, employ locally, bank locally and invest locally. They provide a critical community service to a locality and while many compete on price, their primary hallmark pertains to service. In my constituency, Cork East, I have witnessed the manner in which the traditional independent retailers have been put under increasing pressure by other independent retailers, the multiples and the discounters.

I serve a constituency including Mallow, Cobh, Midleton, Youghal and Fermoy. Carrigtwohill has emerged as the fifth or sixth biggest town in the constituency and it has 3,500 people on the register of electors. Mitchelstown has 3,300 people on the register. Youghal is probably the darkest town in Ireland at present in respect of manufacturing jobs. Out of town on the Waterford side, there are Lidl and Tesco stores. There were two Supervalue stores in the town and one has closed. We have seen increasing fall-out in the retail sector in the town centre.

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