Michael McNamara (Clare, Independent) | Oireachtas source

I move amendment No. 8:

In page 9, between lines 9 and 10, to insert the following: “(3) (a) Without prejudice to the generality of subsections (1)and (2), proscription of sale or resale of certain agricultural or food products below their cost of production in the State may be prohibited by regulation.

(b) A party to a contract or commercial relationship for the supply of agricultural products and food products, or such agricultural products and food products as the Minister deems necessary to ensure fairness and transparency in the food and agricultural food supply chain in the State, shall not require or induce or attempt to require or induce any party to the said commercial relationship or contract (whether directly or indirectly, by agreement, threat, promise or any other means) to offer for sale or resell or offer for resale in the State the said products at a price less than the cost of production of the said product in the State, as determined by the regulator in consultation with Teagasc - the Agriculture and Food Development Authority.”.

Once the regulator has determined the minimum cost of production, the question then becomes what should be done with it. The amendment seeks to facilitate the Minister to make regulations proscribing the sale or resale of certain agricultural or food items at below the cost of production in the State. That is paragraph (a). Paragraph (b) would enable the Minister to simply ban the below-cost selling of all products and food products below the cost of production in the State.

I will give an important example of how a situation can arise whereby a party to a contract can be required to sell at below cost. This has arisen in the dairy sector. I have acknowledged that this sector has generally done quite well in recent years. A cohort of farmers, many of whom were young and all of them, exclusively, were new entrants to dairying who entered into contracts with some of the dairies to produce milk for a certain price. Of course, because of the years of deflation in the food supply chain, prices were not increasing at all, so it seemed like a good deal. They were signing contracts and they were being offered a certain price. On the basis of those contracts, they were able to go to commercial lenders and borrow money to invest, perhaps to buy more land or invest in the types of milking parlour that cost hundreds of thousands of euro and that are now commonplace in the dairy sector. As the costs of production started to rise, however, the costs that farmers in the dairy sector generally were being paid for their products rose with it. This cohort, however, were on fixed contracts. The amendment means that such contracts would be null and void.

When I raised this issue during Questions on Promised Legislation, I appreciated the response of the Minister's party leader and Tánaiste, Deputy Micheál Martin, who had a concern about a radical departure. I do not want to mischaracterise what he said, but what a departure it would be to ban below-cost selling. It has been done and it has been done recently. It was done in Spain in a December 2021 law. That law seeks, ironically or happily - depending on one's position on the matter - to implement exactly the same EU directive this Bill proposes to implement, namely, Directive (EU) 2019/633 on unfair trading practices and business-to-business relationships in the agricultural and food supply chain. This was done to protect food producers in Spain. If it is good enough for food producers in Spain, and if it is possible, then why not here? I am not aware of any infringement proceedings being taken by the Commission. I am aware that various commentators raised their eyebrows at it across the European Union, but I am not aware of any infringement proceedings. Perhaps the Minister will correct me in that regard. If Spain can protect its food producers, then Ireland can protect its food producers.

Below-cost selling is damaging because it drives producers out of business. We can sell carrots, lettuce, milk, butter or beef, take your pick, as cheaply as we wish in Ireland, but it does drive producers out. Consider the horticulture sector in County Clare. When I was a child, which was 30 years ago, there were horticulture producers in Ogonnelloe, which Deputy Kelly will know well, who were producing for the Limerick market. There were horticulture producers up around Galway Bay producing for Galway. There were also lots of horticulture producers around County Dublin who have long since gone out of business. They were driven out of business. This is not good for consumers because they get a different quality of product. Invariably, one cannot have the same quality product if it is produced in Ireland and is in the shops the next day compared with if it is brought in from another part of the world. This also has an impact on our carbon footprint. If we are serious about the environment then we need to stop importing perishable goods by aeroplane. It also means that such a long supply chain stretching to another part of the world can be interrupted very easily and very quickly, and then we do not have domestic producers to fill the gap. We saw that this spring to a limited extent here but to a much greater extent in Britain, where authorities were left to rue the impact of below-cost selling on their horticulture producers in particular.

On the issue of below-cost selling, I will make a prediction as a result of the discussions involving the Minister's colleague, the Minister of State, Deputy Richmond, and the retail forum. We will see that a lot of the big retail multiples will do loss-leader promotions in respect of beef during the summer. This will not be for the consumers' benefit. They will cut the price of beef to get consumers in, but then just charge them more for the booze they will drink with the beef or for the coleslaw, the burger buns or whatever. The retailers will make the same profit, consumers will spend the same amount of money, and the loss will be passed on to farmers who are already in a precarious position. That would be the only impact. We will not see Kellogs' products, or Marmite, or avocados or any imported food items reduced in price, but fresh produce from Ireland will be hammered again and again. This is because the regulator has no power to do anything because the Minister for Agriculture, Food and the Marine chose not to give it the power to act. His Spanish colleague, with whom he had ample opportunity to engage on this matter since a Spanish Bill was introduced in 2021, did do something about it for the benefit of his country's producers. If the Minister does not want to accept this amendment now here today, I urge him to think about what can be done in the Seanad in his name, not in my own name, so our producers are protected from the damaging effects of below-cost selling, not just for producers but for consumers too.

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