Trevor Sargent (Dublin North, Green Party)

The issue of retail margins on food products was first raised as a formal agenda point at the Agriculture and Fisheries Council meeting in January of this year when the Commission introduced its communication which analyses the causes for recent volatility of food prices, provides a medium-term outlook for such prices and outlines a road map for future policy decisions to improve the functioning of the supply chain. The road map comprises five possible avenues as follows: to promote the competitiveness of the food supply chain; to ensure a vigorous and coherent enforcement of competition and consumer protection rules in the food supply markets by the European Commission, the Competition Authority and National Consumer Agency; review at national and-or EU level, as appropriate, regulations that have been identified as potentially problematic for the functioning of the food supply chain; provide better information to consumers, public authorities and market operators by setting up a permanent European monitoring of food prices and the supply chain; and examine measures to discourage speculation to the detriment of commercial operators in agricultural commodity markets.

It is intended that the road map will be followed through the work of a joint taskforce before the end of the year. A review of anti-competitiveness in the food chain, to include the dairy and pigmeat sectors among others, is planned and the Commission also plans to review regulations restricting the entry of companies to supermarkets to aid transparency on food prices. In addition, the recommendations of the high-level group on the competitiveness of the agrifood industry established by the Commission are due to be adopted in early July. A report will be published before the end of this year.

At the Council in January last and again last Monday, the Minister, Deputy Smith, pointed out that competition alone cannot act as a sole mechanism to maintain efficient markets. The careful and sensitive use of market management measures can help to maintain balance on the market when appropriate and the use of such mechanisms can assist in the provision of fair returns to producers.

Additional information not given on the floor of the House.

Underlying the debate is the increasing concentration of retail power in the hands of a few large supermarket chains. This is an international phenomenon, which has fundamentally changed the balance of market negotiating power in the food chain. This is one factor, although not the only one, behind the declining share of retail prices which is passed back to producers. While there is, of course, always potential for some conflict in any market relationship, there has been a noticeable trend recently towards greater conflict, and even allegations of sharp practice, which we cannot and should not ignore. Many of my colleagues on the Council of Ministers also expressed strong views on this matter.

I believe that consolidation at processor level is necessary to ensure maximum efficiency and to balance the market power of the large retail multiples. Competition policy must be sensitive to this.

There are many gaps in our information about the market. Information, like negotiating power, is not evenly distributed among the players in the market. This is an area where perhaps we can consider ways of ensuring greater transparency and a more open flow of cost and price information from and to all participants in the food marketing chain. At EU level there is a need to give urgent thought to this and to how we might be more active in ensuring markets function well and that unfair practices are prevented.

We can all agree on the paramount importance of the European agrifood industry, both in Ireland and across Europe. The EU must safeguard its production base so that it can meet the future demand of its population for food, feed and bio-energy. While fully recognising that retailers must strike a reasonable balance between granting price reductions to consumers and giving to suppliers and producers a fair return, this should not be done at the expense of a viable European agrifood sector.

The matter will again be considered by Council.

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