Thursday, 19 January 2023
Agricultural and Food Supply Chain Bill 2022: Second Stage
Holly Cairns (Cork South West, Social Democrats)
Farmers, fishers and food producers have the most important roles in our society. Without them, we would have no food. Basically, everything begins with their vital work. Despite their significance, the primary producers and workers in this area, namely, the people who grow crops, rear animals, catch fish and make food, are often treated extremely poorly. While the Government pays lip service to them, the reality is that successive Governments have allowed and facilitated a massively inequitable system for decades that has seen a few big players become incredibly rich off the backs of family farmers, inshore fishers, meat factory workers and small producers.
The most common feature across all production in this country is inequality. There is a startling asymmetry of power. In the meat sector, we all know about the cartel-like practices that leave farmers completely vulnerable to the industry, while factory workers do extremely dangerous work in poor and underpaid conditions. Similarly, small-scale producers are exposed to the tendering process set by large wholesalers and retailers. Inshore fishers are only permitted to avail of a tiny proportion of some fishing quotas by the Government. The primary workers in all these areas face the same challenges. This status quohas been maintained for years by lobbying from the industry and retailers. The only reason there is some change is because of EU law.
This Bill brings EU Directive 2019/633 into Irish law and that has been the impetus for this change. This legislation contains many long overdue changes and transparencies. However, it falls short of the much-needed reforms that would see a properly resourced, independent regulator with the powers to implement genuinely fair practices. The Government parties’ predisposition to light-touch regulation in the finance and construction sectors, which has spelt disaster for ordinary people, is now being applied to the food sector. This is a half-done job that still favours the big players at the expense of small farmers, food producers and inshore fishers. The fundamental flaw at the centre of this Bill is the failure to establish an independent regulator. The Bill claims that it is what it is doing, but it clearly is not. It lacks the powers of a genuine regulator. The Minister for Agriculture, Food and the Marine has too much influence on this body, and it will be too closely linked to the sector.
Crucially, this new body will be a regulator in name only. Regulators must have the capacity to develop and implement regulations without restriction, as well as commensurate powers to investigate potential violations and implement the law. The new office needs to have - in the words of Pat McCormack, president of the Irish Creamery Milk Suppliers Association, ICMSA - “the ability and power to go in and examine exactly what is happening along the food chain”. That is currently not the case. The new office proposed by the Government will only be able to access publicly available information, rather than crucial information on practices in these areas, on costs and margins in the supply chain and on unpublished market data.
The agriculture committee’s pre-legislative scrutiny report draws attention to this issue and recommends that the office "should also have the power to require market data that isn’t publicly published”, with due regard to the sensitivity of such data. Without this capacity, all the office can do is collate existing information, basically for glossy reports and nice graphs on social media, but none of this will make any difference to farmers struggling to get by in west Cork, Donegal or anywhere else in rural Ireland.
There needs to be access to information from the whole supply chain. Anything else will fail primary producers and we all know that. Another matter which needs to be developed is the conducting of inspections. The agriculture committee rightly called for “random inspections on suppliers and buyers to ensure continued compliance with the rules on unfair trading practices”.
The power to conduct unannounced inspections is absolutely essential to any form of credible regulation.
While the Bill will confer powers to examine records and seize evidence, explicit recognition of the capability to carry out unannounced inspections is necessary. This would both clarify this point and strengthen the office’s role in monitoring the entire food chain. Under section 4, the Minister will retain the powers to make and change regulations. This means many of the key decisions will remain political, not independent. During pre-legislative scrutiny, concerns were raised about this area of the Bill and the ongoing lack of transparency. This new office needs to have the capacity to create regulations. This point relates to the larger lack of independence. When I think of a regulator, I think of an individual officeholder with expertise and staff to support his or her work in upholding the law and acting in the public interest. Instead, there will be a board of eight people, all appointed by the Minister, with at least two being primary producers. This is not a regulator; it is another quango.
The only other criterion outlined in section 21 is for board members to "have experience of, and to have shown capacity in, matters relevant to the regulator’s functions." From what I know about how these things work, it is very likely people who have worked for or closely with the food processing industry and larger retailers will be appointed.
For this to be a real regulator that will fulfil its mandate and have the confidence of food producers, it needs to be fully unbiased and disconnected from the big players in the agri-food sector. That is just common sense. The Bill does not have those safeguards. It does not propose an insulated system. Instead, the board could be populated by people associated with the same companies they are supposed to be monitoring. The Bill has learned nothing from previous and current scandals when cosy relationships and jobs for the boys have facilitated all manner of failures. Section 9 claims that this new office will be independent but that is blatantly untrue. The Bill will continue to give the Minister too much influence and will not create barriers between the sector and those appointed to oversee it. On paper, many of the aspects of the Bill are impressive and it technically fulfils many of the functions of a regulator, but when we look at it in detail, core principles and the practice of independence and regulation are breached.
One of the most glaringly unfair trading practices that has to be addressed is the below-cost procurement of food. It is simply wrong, not to mention unsustainable, that farmers and small-scale producers end up receiving less than the cost of their livestock or produce from retailers and food processors. This is the definition of an unfair practice. Farmers spend months rearing animals, and it is not just about the material costs of feeding and caring but the hours of work that go into bringing up an animal. Then, when it comes to selling, with the price and all the additional costs combined, they make a loss. No wonder there are fewer and fewer family farms.
The same thing happens with small-scale producers that in good faith enter into contracts with larger retailers and for which business becomes their main source of income. Then, the retailers change the conditions, demanding they do more for less. The small-scale producers have no choice but to comply, regardless of how it affects their bottom line. We all know examples of this and similar cases. Those who do the hardest and most specialised work often end up receiving the least.
The horticulture sector has been hit particularly hard by these unfair trading practices, leading to many farmers leaving that subsector. These farmers are vulnerable to the price variations and asymmetrical tendering process of large retailers and wholesalers. The national field vegetable census shows that between 1999 and 2014, the number of field vegetable growers fell from 377 to 165. No wonder it is increasingly hard to find Irish-grown fruit and vegetables on the shelves. Even though we have an ideal climate to grow many species, market practices mean this is simply unviable.
This is worrying for our food sovereignty. It has been allowed to happen under the current and previous Governments. The only thing that will address this major issue is a proper regulator that can examine the food supply chain and set minimum procurement costs. The current system is simply bad economics. It is pushing farmers and producers out of the market and forcing those who remain into more intensive models, which leaves them dependent on other factors such as imported fertiliser. We saw the impact of that this time last year, with sky-rocketing production costs.
Farmers are being squeezed by two contradictory forces. On the one hand, the Government and society are, rightly, looking for greater environmental sustainability, but on the other, the Government is facilitating processes that force farmers into unsustainable practices just to get by. Farmers cannot win; the system is rigged. The only reason many farmers are still in business relates to the State payments they receive. Public money is being used to subsidise retailers and food processors, not the people. This system has slowly emerged and developed and is now so ingrained that it is difficult to see a way out. All farmers, fishers and producers want is a fair and reliable price to know they can make a livelihood and support their families. The public wants decent food at a reasonable price and there is still plenty of room for retailers, wholesalers and processors to make a profit.
All this can be achieved with proper regulation. Not only is that a win-win situation but it is a more ethical and sustainable system that will provide a viable future for rural Ireland and Ireland’s food security. If the Bill is about valuing and protecting farmers, fishers and small producers, it needs to address the below-cost procurement of food. This point was heavily emphasised by representatives of the Irish Farming Association, IFA, at a meeting of the Joint Committee on Agriculture, Food and the Marine, who highlighted the need to "prohibit the buying of food below the cost of production by food procurement managers in dominant positions." This would be a game changer for the food sector that would enable farmers and other producers to receive fair prices. It would not only help to keep people farming but also encourage others to enter this area. This should be a key function of the new body. It will support and protect ordinary farmers and producers and go some way to confronting the systemic inequities in our food chain supplies.
Transparency is the key to this function. This new office needs to be able to examine, and independently publish information on, the cost of production and the prices producers receive. This can then be aggregated to set minimum sums buyers can pay producers and suppliers of food. Many segments of the food chain remain worryingly obscure. At one end, farmers, fishers and producers can tell us their production costs per unit and we know the prices on the shop shelves, but the pricing between these points remains unclear and is damaging to the viability of this sector.
Various stakeholders have suggested approaches and models the Government should examine. Macra na Feirme, for example, discussed the importance of creating an index of the costs of production for the farm systems in each sector, which could be used to outline the definition of "farm economic viability". With this evidence-based overview, fair pricing in food procurement could be established transparently. The absence of a cost of production price for farmers and producers is simply wrong. It is bad economics and it is eroding rural communities, not to mention the environment. Without proper provisions to examine these practices and enforce minimum procurement levels, this legislation will maintain thestatus quoand, regrettably, it seems as though that is precisely what it was designed to do. It looks good on paper but falls so far short of what is needed and of what farming organisations are seeking. The Bill will make little difference to farmers, fishers and small-scale producers that are barely getting by.
There has been insufficient discussion of fisheries in the Bill. The inshore sector, in particular, is subject to limitations that restrict livelihoods and the viability of our coastal and island communities. I was disappointed at the lack of reference to fisheries in the pre-legislative process and the committee’s report. Inshore fishers have continually drawn attention to the inequitable distribution of our national quotas. In this case, it is the Government that is to blame. It is always pointing the finger at the EU, but it has given vastly disproportionate quotas to a small few large players at the expense of thousands of inshore fishers.
I reiterate that our fishing quota is a public resource. It has to be distributed equally among fishers. The example of the mackerel quota illustrates the appalling disparity in the Government’s allocations.
Currently, only 2% of this quota is assigned to all vessels under 15 m, while 98% is given to a small few, much larger boats. Inshore fishers make up the majority of the fishing sector and represent the most sustainable type of fishing which has been practised in our island and coastal communities for centuries, yet they are receiving a tiny portion of this resource, at 2%. This amounts to a breach of fairness in the food supply chain, the very thing this Bill is meant to address. Given that the Government has refused to change its position on this matter, will the new office have the powers to hold the Minister and Department to account for this blatantly unfair practice? Inshore fishers have been seeking a more even-handed approach. I have raised this matter repeatedly. The only way I can see any change is if an independent regulator were to force it but as this Bill does not allow for that type of regulator, this looks like another case of maintaining the status quo.
There are a number of particular matters raised by stakeholders which the Bill needs to fully incorporate. The Irish Grain Growers group has asked for the specific inclusion of feed alongside food products to reflect growers' role in the food supply chain. The Irish Natura and Hill Farmers Association, INHFA, rightly highlights that the new office should have the capacity to look at all input costs for primary producers, including insurance. The IFA raised important points around supporting branded food products, regulating the use of logos to guarantee the Irish origin of produce and prohibiting the creation of fake farms for retailers to sell their own-brand foodstuffs. These are just some of the practical and extremely significant issues raised, which the Minister needs to ensure are addressed in the Bill.
This Bill proposes a light-touch regulation model with an office that will not be able to carry out the necessary monitoring and enforcement work to reform the sector. Our food supply chains have systematic inequalities with a small number of processors, wholesalers and retailers in significantly stronger positions than the average farmer or fisher. The only way this will change is with robust legislation designed to establish a full independent regulator who is a single officeholder with expert staff focused on holding all actors to account. This Bill falls so far short of this standard it will make no real difference to the unfair operating practices our food producers face every day. At least the Government had the honesty not to refer to the new quango as a regulator in the Bill Title. This is just a box-ticking exercise, providing for a new office that will supposedly oversee trading practices while the ingrained structural problems will continue to put farmers and fishers out of business. This Bill is a wasted opportunity to reform our agrifood sector to ensure the sustainable future of all our rural and coastal communities. Farmers, fishers and food producers will continue to face the same issues and unfair practices unless the legislation is changed now.