Thursday, 19 January 2023
Agricultural and Food Supply Chain Bill 2022: Second Stage
Charlie McConalogue (Donegal, Fianna Fail)
I move: "That the Bill be now read a Second Time."
As Deputies will be aware, the programme for Government included a commitment to ensure fairness, equity and transparency in the food chain by establishing a new authority to enforce the unfair trading practices directive. The commitment was also that the new office would have a specific role in analysing and reporting on price and market data in Ireland. I am pleased to present the legislation that delivers on that commitment. I thank the stakeholders who contributed to the public consultation on the Bill held by my Department in 2021 and those who made helpful contributions to the pre-legislative scrutiny process in 2022. I also thank the members of the Joint Committee on Agriculture, Food and the Marine for their valuable work on the pre-legislative scrutiny report. I believe the report’s recommendations that have been incorporated into the Bill have helped to strengthen the Bill to achieve its objectives.
The Government fully supports the need to enhance fairness, equity and transparency in the agricultural and food supply chain, particularly in strengthening the position of our farmers, growers, fishers and small food producers. The agrifood sector is our largest indigenous sector, playing a vital role in the economy and in our rural and coastal communities. The sector accounts for almost 7% of gross national income and more than 9% of exports in value terms.
It employs over 170,000 people, representing over 7% of total employment. Total exports of agrifood products last year were estimated by my Department at €18.7 billion.
The economic viability of our farmers, growers, fishers and small food producers who contribute to our largest indigenous sector is essential for the continued success of the sector and our rural communities. It is, therefore, important that they can be assured that there are adequate protections in place to ensure they are treated fairly in their business dealings along the agrifood supply chain. This Bill provides that protection. For the first time, we are establishing, on a statutory basis, an independent office which will promote fairness and transparency in the agricultural and food supply chain and must have regard to the circumstances and needs of the agricultural and food sector.
This new office, an rialálaí agraibhia, or the agri food regulator, will have two key functions. First, it will deliver a price and market analysis and reporting function. In doing so, the new body will facilitate timely access to information about price and market trends, which should help bring greater transparency to the agrifood supply chain. This function should help food businesses, including primary producers, to compete effectively and take well-informed production and marketing decisions. Second, the agri food regulator will also become the designated national enforcement authority for the unfair trading practices, UTPs, directive and any additional unfair trading regulations introduced under this Bill. Deputies will be aware of the deadline of 1 May 2021 for the transposition of the EU directive on unfair trading practices. At that time, I transposed the directive by statutory instrument and, at the same time, as an interim measure, I established the unfair trading practices enforcement authority in my Department. The Bill provides that all powers of enforcement of unfair trading practices will transfer to the new authority. On governance matters, the Bill provides that the regulator will be led by a board, will have a chief executive officer and will operate as a separate State body funded by my Department.
Turning to the structure of the Bill and the related provisions, I refer to the name of the new authority. It became clear, following the public consultation that the inclusion of the term "Ombudsman" in the name was not appropriate. A recommendation of the pre-legislative scrutiny report recommended that the name should include the term "regulator" and I have taken this on board. The new body will be known as an rialálaí agraibhia or the agri food regulator. This name adequately reflects the purpose of the new office.
Part 1, sections 1 to 6, inclusive, sets out the preliminary and general provisions, including definitions of terms used in the Bill. Part 2, which encompasses sections 7 to 54, inclusive, deals with many of the operational arrangements of the regulator, including establishment provisions; key functions to be delivered by the regulator; governance and related proceedings; appointment and functions of the chief executive officer; attendance before Oireachtas committees; staffing, planning and reporting; finance; and standard provisions for prohibited disclosures and membership of other bodies. The key functions are covered in sections 11 to 16, inclusive, and these include promoting fairness and transparency in the agricultural and food supply chain, which is section 11; and providing information on price and market data, including publishing such information.
Taking account of one of the pre-legislative scrutiny report recommendations, recommendation No. 3 from the Joint Committee on Agriculture, Food and the Marine, the reference to the term “publicly available” information, which was included in the general scheme of the Bill, has been deleted. Also in line with another pre-legislative scrutiny recommendation from the committee, No. 5, the text has been clarified to ensure that the regulator may consider matters outside the State, as required, under section 12. Another function is enhancing the understanding of and compliance with agrifood unfair trading law. I am pleased that the pre-legislative scrutiny report recommendation No. 6 welcomed that the regulator will promote awareness and conduct public information campaigns. Another key function will be the important role of the enforcement of unfair trading law, which includes investigating and initiating legal proceedings for offences where the regulator believes an offence has been committed. Another key role is that the regulator will issue guidelines and review codes of practice. This should help to increase awareness of the need to enhance fairness and transparency in the agrifood supply chain, as well as consistency across the business dealings, which are covered in sections 15 and 16.
The Bill provides that the regulator shall provide advice and information to the Minister about matters relating to the agricultural and food sector. I will refer to one of the pre-legislative scrutiny report recommendations, No. 18, that the regulator should be obliged to examine, with a view to proposing, mechanisms by which the purchase of foodstuffs below the cost of production can be introduced. I am satisfied that there are appropriate mechanisms in the Bill to allow the regulator to examine and report on any relevant matters impacting the agrifood supply chain.
On the governance arrangements, taking into account the pre-legislative scrutiny recommendation No. 7 to increase the number of board members, the number has been increased from six to eight, including the chairperson. In order to reflect the importance of the primary producer in the agrifood supply chain, the Bill also provides that the board members must include at least two primary producers. An objective to have an equal number of men and women on the board is also included in section 21. There are standard requirements provided in the Bill for proceedings and meetings of the board, including the quorum for meetings. Following on from recommendation No. 7 in the pre-legislative scrutiny report, the quorum has been increased from three to five. To advise and assist it, there is provision in the Bill for the regulator to establish committees, if required, under section 28.
On the appointment, functions and status of the CEO, the CEO will manage the office and report to the board. A competition for the CEO has been held recently and the recruitment process is currently being finalised by my Department. The Bill provides that both the CEO and chairperson of the board will appear before Oireachtas committees. One of the pre-legislative scrutiny report recommendations, No. 8, was that, before commencing the role, the CEO-designate should appear before the relevant sectoral committee to discuss their strategic priorities for the role. However, this would not be appropriate as it is the board that is responsible for the strategic direction of the office, not the CEO, who will report to the board. The CEO will be required to appear before relevant Oireachtas committees once he or she has commenced the role, which is provided for under section 36(1). Another pre-legislative scrutiny report recommendation, No. 9, was that there should be specific reference to the Oireachtas Select Committee on Agriculture, Food and the Marine. This is now mentioned in Section 36(11), following on from acceptance of that recommendation.
The Bill provides that the agri food regulator will prepare a strategy statement, an annual work programme, an annual report and reports on complaints and investigations and decisions. Concerning the annual report, I have implemented two separate recommendations of the pre-legislative scrutiny report. First, recommendation No. 10 is that the remuneration of the CEO will be published. I have provided that this will be included in the annual report. Second, recommendation No. 15 is that any recommendations to the Minister in respect of legislation will also be published in the annual report.
I move to Part 3, which is covered under sections 55 to 70, inclusive. This Part deals with unfair trading practices, including the scope of enforcement; the powers to make regulations; the prohibition of unfair trading practices; offences of unfair trading practices; complaints; fees; investigations; and alternative dispute resolution. The scope of the unfair trading practices concerns business-to-business relationships. The pre-legislative scrutiny report recommendation No. 1 recommended that the scope be broadened to business-to-consumer relationships and that the Competition and Consumer Protection Commission, CCPC, competency for all functions relating to the sale of foodstuffs be transferred to the regulator. The pre-legislative scrutiny report also recommended in recommendation No. 19 that the regulator have full enforcement powers, including confiscation of any evidence in a case where it believes or suspects a processor or processors are collaborating in price.
I gave these recommendations much consideration and I have concluded that it would not be appropriate to transfer competition-related powers from the CCPC as this approach would result in two competition and consumer protection authorities, with the potential for duplication and overlap. As it stands, the Bill provides for strong powers of enforcement regarding unfair trading practices and will allow for additional UTPs to be introduced. In addition, while the CCPC was previously responsible for the enforcement of the grocery goods regulations 2016, which included foodstuffs, this is no longer the case since April 2022, when those regulations were revoked. The regulator will liaise with the CCPC and other authorities on relevant issues, and the regulator may bring to the attention of the CCPC any matters it considers to be relevant to competition law that arise in the course of its investigations or analysis. This would be considered normal practice between enforcement bodies.
The Bill provides the Minister with the power to make regulations about business-to-business relationships. It details items the Minister must take under consideration and have due regard for before issuing such regulations, which will be known as the agrifood unfair trading regulations. The unfair trading practices included in SI 198 of 2021 have been provided for in the regulation-making powers in section 57.
The Bill provides for types of unfair trading practices specifically relating to payments, including late payments; payments not related to the sale of the agricultural and food products; payment for deterioration or loss of products; charges for stocking, displaying or listing products, or fitting out; charges for making products available on the market; the cost of any discounts sold by the buyer as part of a promotion; a charge for advertising or marketing by the buyer; and payment of compensation for the cost of examining customer complaints. The Bill also provides for the regulation of changes of supply terms, including short-notice cancellations of orders of perishable products. It also provides that regulations may prohibit a unilateral change to certain terms of a supply agreement in section 59. The regulation of contract arrangements are also provided for in the Bill in section 60, while in section 61 the Bill also provides for the regulation of supply conditions. Section 62 deals with rules on malpractice concerning misuse of trade secrets, and acts of commercial retaliation against the supplier are also included. In section 65 there is provision for new regulations to be made to supplement the current UTPs.
Recommendation No. 20 of the pre-legislative scrutiny report was that the new body should have powers "to see all documentation of processor and retailer of prices achieved for product so as to ascertain the margins in all parts of market". I am satisfied that the price and market analysis and reporting function in the Bill will provide information on the market from which costs and margins should be capable of being estimated, for example, following analysis of seller and buyer prices. In the context of an investigation of suspected or alleged unfair trading practice, the regulator will have access to all papers and documentation relating to the suspected or alleged UTP, including contract arrangements with suppliers.
With regard to the enforcement of UTPs, I consider that a number of the pre-legislative scrutiny report’s recommendations are provided for, including the following. The fines for indictable offences have been increased to not exceeding the greater of €10 million or 10% of the aggregate turnover of the operator in the financial year in which the offence was committed. The Bill now clearly provides for farming organisations to make complaints to the office of their own volition under section 67(2). I have also removed the requirement for complainants to request that their information be kept confidential. It is now specifically required that the regulator must respond to complainants in writing under section 67(5). I have clarified that where alternative dispute resolution mechanisms fail, the regulator shall resume the investigation or consideration of the complaint, as suggested in recommendation No. 14 of the pre-legislative scrutiny report. While I have no intention to introduce a charge for complaints in the short term, I considered that, based on the experience of other complaints and appeal procedures, it was prudent to provide for this under section 68.
Turning to Part 4, which covers sections 71 to 86, inclusive, this deals mainly with the enforcement powers assigned to the regulator and criminal proceedings. I consider that the Bill provides significant investigative powers to the regulator including to enter premises and seize evidence where it believes a breach of the UTPs has occurred. The regulator is also empowered to carry out inspections where a complaint has not been received. This takes account of a recommendation No. 4 of the Oireachtas committee's pre-legislative scrutiny report. The Bill provides a time period for the institution of summary proceedings for an offence from the date on which the offence was alleged to have been committed. The deadline that was set out in the general scheme has been extended from two years to three years to take account of recommendation of the pre-legislative scrutiny report. While the Bill provides for significant penalties for indictable offences, there is also a provision for a fixed payment notice. This is an option that can be used depending on the gravity of the alleged or suspected offence in certain circumstances. It is envisaged that this provision would be used only in very limited circumstances.
In conclusion, the events of last year have shown that it is now more important than ever to have a resilient and sustainable agrifood sector which produces the best food in the world. The Bill aims to ensure there is protection for all farmers, fishers, growers and small business operating in the agrifood sector against unfair trading practices and that the availability of market and price information brings greater market transparency. It is my sincerest hope that we can progress the enactment of this Bill without undue delay and establish this much-needed agrifood regulator. I commend the Bill to the House.
I look forward to the Second Stage debate, as well as Committee and further Stages. As has been the case previously, I look forward to hearing Members' views and perspectives on it. My sole objective here, having campaigned and pushed for an agrifood regulator for many years, is to ensure we introduce an office which brings real transparency to the food supply chain and serves our primary producers effectively in the years ahead. I look forward to the debate and the other Stages of the Bill as it progresses through both the Dáil and the Seanad.
I thank my team, Angela Robinson and assistant secretary Sinéad McPhillips, who have done a huge amount of work in driving this on and leading on it. It is a significant change in our agrifood legislative environment. It is a most important step and one which has taken a lot of time in the Department. I recognise the work of the Department in getting the legislation this far and that of the wider team which supported Ms McPhllips and Ms Robinson in that process.