Dáil debates

Wednesday, 20 May 2009

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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Question 42: To ask the Minister for Agriculture, Fisheries and Food the way he proposes to protect and increase jobs in the food industry in view of the threats posed to employment in the sector by the major multiples, some of whom are increasing their dependance on UK suppliers; and if he will make a statement on the matter. [20643/09]

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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The agrifood sector is Ireland's most important indigenous sector, providing hundreds of thousands of jobs throughout every county at producer and processor level. The sector was never more important to the Irish economy than it is now. We are justifiably proud of our reputation as "Ireland the Food Island" and, notwithstanding current economic difficulties, the Government is continuing to invest hundreds of millions of euro at farm and processor levels.

As a food producing country, it is essential that we have a robust food industry that provides an outlet for our producers and adds value to the primary product. Irish food, drink and horticulture exports last year were worth in excess of €8 billion. I share Bord Bia's view that the industry has the potential to boost annual export returns by more than 20%, thus reaching €10 billion by 2011.

The sector generates output of €20 billion annually. It has been and continues to be supported at primary, processing, research and marketing levels through a range of measures undertaken in line with the strategy set out in the agri-vision 2015 report. The food industry is vital to our economic future, in particular at this time in terms of employment, value-added and export earnings. While it is undoubtedly facing challenges it has in the past demonstrated its resilience and capacity to adapt to competitive challenges and to build business in emerging and changing markets.

Building on the natural advantages of food production in Ireland and applying the highest standards of food safety, the sector has been transformed into a sophisticated industry well capable of competing on worldwide markets. In more recent times, mainly because of the depreciation of sterling and general contraction of demand, the competitive pressures on the sector have become more acute. The Government is conscious of the factors impacting on the industry and is actively engaged in identifying ways in which we can continue to assist the sector's development and growth.

While it is essential that we continue to identify and build new export markets for our food and beverages, it is equally important that we have a strong domestic market for Irish food and drink. A strong domestic presence is an essential factor in developing export markets. In this regard, we need an Irish retail sector that maintains a strong commitment to sourcing and providing a comprehensive range of familiar Irish products and brands. Ultimately, of course, it is a matter for consumers if they wish to support quality Irish food products, indigenous Irish suppliers and Irish jobs.

I strongly agree with the Tánaiste that retailers must strike a reasonable balance between granting price reductions to consumers, a practice with which none of us would disagree, and giving to suppliers and producers a fair return, which is essential to the maintenance of thousands of Irish jobs and the survival of primary producers.

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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I asked the Minister what steps the Government proposes to take in light of the threat posed. Members will have heard yesterday the outpouring of anger by Irish farmers.

A survey which I conducted last August shows a 220% mark-up my the multiplies for beef and a 177% mark-up for milk for which farmers were at that time getting 31 cent a litre and are now getting only 21 cent a litre. Does the Government have a strategy to deal with this? The retail sector is like the wild west; there is absolute mayhem where Irish suppliers are being led like lambs to the slaughter by the multiples. Many of the multiples, in particular Tesco, are outsourcing products for their supermarket shelves. Does the Government have a job retention strategy for the primary producers and those involved in the retail sector?

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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I share Deputy Creed's concerns. Indeed, I heard him express on another fora his concerns in regard to the returns to primary producers and, in many instances, processors. I want to reiterate that while recent reductions in prices will undoubtedly be welcomed by consumers and will help to address the difference in price between here and Northern Ireland, the Government appreciates and is conscious of the concerns expressed in regard to the possible implications for employment in this country, in particular if changes in supply change arrangements reduce the level of purchases by retailers from Irish producers.

The Tánaiste and I have met with and outlined to the major multiplies the fact that our primary producers and processors, be they small, medium or large enterprises, need a fair return on the products they supply. Among these small, medium and large enterprises are world-class leaders in food production systems, be it in the area of beef, dairy or any other food product. These enterprises have invested considerably in recent years, as has the taxpayer, in terms of providing new facilities and ensuring that our industry is at the cutting edge of technology. Some of the world leaders, in terms of international brands, are located here. They deserve the absolute support of the multiples who are trading in our country.

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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We all agree with that. The problem is that those quality products are not getting space on the multiples' shelves because of imported product from the UK. I reiterate, does the Government have a strategy to deal with this? In particular, will the Minister agree with the suggestion I made on radio this morning, which the Minister indicated earlier he heard, that, as in the case of the UK, we introduce a code of conduct for retailers and suppliers, enforced by an agency equivalent to the Office of Fair Trading by way of a merger of the Competition Authority and Consumers Association of Ireland. This would ensure fair treatment. Currently, we have excessive profiteering by Tesco which had a 9% margin in 2008-09. To put this in context, the global turnover of Tesco is more than 1.5 times the GDP of the State. It is making approximately €20,000 per second globally and did not get to that position by pussy-footing around the place. I fear Tesco is running rings around the Government and that unless something is done urgently thousands of jobs will be lost in the quality firms to which the Minister referred and at the farm gate.

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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I referred in my earlier remarks to the questions posed by Deputy Creed in regard to the primary producers and processors.

I discussed yesterday with the Minister of State, Deputy Sargent, and my officials the operation of the UK code, which I understand has been subject to ongoing criticism, in particular by suppliers in terms of its effectiveness. The Tánaiste told the House yesterday that the Competition Authority has reported to her on how competition in the retail import distribution sector is working. She also stated that her officials are analysing the report and that she will publish it shortly. The Minister of State and I, with the officials, are engaging with the Tánaiste on the content of that report. If, following our consideration of the report, decisions need to be taken or regulations need to be implemented, the Deputy can rest assured the Government will do so urgently. We are particularly conscious of the threat to jobs and income for the primary producer and the threat to jobs in our primary processors. The industry has gone from a commodity-based industry to a sophisticated food industry and it deserves every credit in that regard.