Michael Moynihan (Cork North West, Fianna Fail)
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Question 31: To ask the Minister for Agriculture, Fisheries and Food his views on the recent debates at the EU Agriculture and Fisheries Council on food retail margins; and if he will make a statement on the matter. [25938/09]

Trevor Sargent (Dublin North, Green Party)
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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.

Seán Sherlock (Cork East, Labour)
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Without meaning to sound facetious, the Minister of State could have dealt with this point when answering Question No. 28. However, this is a question of marketing negotiating power.

Brendan Howlin (Wexford, Labour)
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Ordinary questions are not grouped with priority questions because they would exclude the ordinary question from supplementary questions.

Seán Sherlock (Cork East, Labour)
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I thank the Leas-Cheann Comhairle. I am at pains to understand some of the arcane practices of this House at times.

Brendan Howlin (Wexford, Labour)
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If the Deputy had tabled the ordinary question and were excluded from asking supplementary questions, he would have been aggrieved.

Seán Sherlock (Cork East, Labour)
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I take your point, a Leas-Cheann Comhairle.

Andrew Doyle (Wicklow, Fine Gael)
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The Minister of State could have given me the answer.

Trevor Sargent (Dublin North, Green Party)
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It is worth discussing again.

Michael Creed (Cork North West, Fine Gael)
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Again and again.

Brendan Howlin (Wexford, Labour)
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Allow Deputy Sherlock to speak without interruption

Andrew Doyle (Wicklow, Fine Gael)
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The Minister of State need not worry; it will be on the agenda.

Seán Sherlock (Cork East, Labour)
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The Commissioner has outlined a number of points which are aspirational and laudable in their own way. For Irish agribusiness to flourish there needs to be a fundamental shift in the position vis-À-vis the retailer and the primary producer and processor. This has been already outlined in great detail. Rather than waiting for report after report, will the Government not grab the bull by the horns, take the initiative and implement legislation? It should stop waiting for the European Union's guidance on every matter relating to the agribusiness sector in this economy. We have a very viable market, with the Minister of State, Deputy Sargent, at the forefront given that he has responsibility for food. We need to see action now and that relationship needs to be reinstated. This House has the power to implement its own rules and regulations vis-À-vis the relationship, as it does not contravene EU rules. I ask the Minister of State to act urgently to reinstate that relationship.

Trevor Sargent (Dublin North, Green Party)
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I share the Deputy's sense of urgency about the matter. Along with the Tánaiste and Minister for Enterprise, Trade and Employment, who understands the agricultural sector more than most other Ministers for Enterprise, Trade and Employment given her background, I have been at pains to state that we need urgent action to introduce legislation and a code of practice. That would provide for the Ombudsman to be able to hear evidence. This is an area which ostensibly has been bedevilled with intimidation — I use the word very explicitly. Suppliers are afraid to say publicly what they will say privately to me for fear of being identified, which is causing a lack of transparency in the system. On a radio programme this morning there was a question about "hello money". There was a denial that "hello money" was being requested because it would be illegal. However, I have heard references to "market support money", "advertising money", and "promotional money". At the moment the people who are saying that privately will not do so publicly. That is why this code of practice and this retail ombudsman position are urgently required. I have said so to the Minister and to other members of the Government. I say it again here in the House.

Michael Creed (Cork North West, Fine Gael)
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I make this point in the context of having been previously advised by the Minister for Agriculture, Fisheries and Forestry, who is unavoidably absent today, that the code of conduct in the UK was not all it was made out to be. I have in the interim had time to reconsider the matter and that apparently is the case.

Does the Minister of State not find it ironic in the extreme that the architect of the dismantling of the groceries order in Ireland, who has now moved on to the UK competition authority and is in the throes of reorganising the legislative framework there, within which the retail sector operates, has concluded that a voluntary code of conduct and ombudsman is not the way forward and that global retailers such as Tesco are able to run rings around and abuse their suppliers by virtue of the lack of legislative clout that system brings with it?

Brendan Howlin (Wexford, Labour)
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While I am anxious to allow a little latitude on this question, I must ask Members to be brief.

Michael Creed (Cork North West, Fine Gael)
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Lest there is any doubt in regard to whether consumers are being ripped off through this framework, dairy prices to the primary producer have tumbled by 17% in the past 12 months while prices to the consumer have dropped by only 2%.

Brendan Howlin (Wexford, Labour)
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The Deputy is giving information now.

Michael Creed (Cork North West, Fine Gael)
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Is it not the case that the best legislative framework to deal with this will require real clout and teeth and that a voluntary code of conduct may not, if we are to learn from experience across the water, be the best way to go?

Trevor Sargent (Dublin North, Green Party)
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I would like such framework to be legally enforceable and to have teeth. I am in no doubt about that. However, doing that takes longer in the legislative cycle than putting in place a voluntary code. We need to do both. We must, first, send out the signal that this is an urgent matter that cannot wait until a perfect solution is found and, second, we must create the expectation that a framework with legal enforceable teeth will be in place as soon as possible. Reliance on the supermarket as the gateway for food is equally a part of the overall issue that needs to be addressed. There is less reliance in other European member states on the supermarket as a route to market than exists in this country. It is not an easy issue to tackle. Until we create healthy alternatives to supermarkets as a route to market, thus ensuring the supermarket is not the only show in town, the multiples will continue to make matters difficult for suppliers resulting in suppliers being price takers rather than price makers.

Brendan Howlin (Wexford, Labour)
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I am anxious to allow other Members to ask a brief supplementary question. I call Deputy Doyle followed by Deputy Sherlock.

Andrew Doyle (Wicklow, Fine Gael)
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Against the background of people being intimidated and afraid to come forward and speak up for fear of losing whatever pitch they have, does the Minister of State accept that the remit of the Competition Authority, whose involvement I am led to believe was initiated by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, against a background of public anger of rising prices vis-á-vis shopping in the North, should have been much broader and should have included power to examine practices that pertain in the retail sector, including the supply chain and the behaviour of the multiples? Currently, three multiples are controlling 70% of the market. Does the Minister of State accept that ultimately everybody else will be wiped out resulting in increased prices, the consumer losing out and the loss of up to 100,000 jobs?

Seán Sherlock (Cork East, Labour)
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The model to which the Minister of State aspires is the French model whereby one goes to the Carrefour for one's larger cheaper products and to the boulangerie for one's baguette and so on. The problem with the Irish model is that there is absolutely no transparency vis-á-vis profits. A lack of transparency vis-á-vis the profits of the larger multiples affects the relationship between the product, primary supplier and the retailer, thus allowing situations as that described by the Minister of State. Until we get that transparency we will not get a better deal for the primary producer resulting in a loss of jobs in this economy. We are already seeing this in the Border counties. Members are aware of what happened with Tesco.

Brendan Howlin (Wexford, Labour)
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A final reply from the Minister of State.

Seán Sherlock (Cork East, Labour)
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I beg the Leas-Cheann Comhairle's indulgence, but an ombudsman will not be enough to rectify the problem. This will require a legislative framework such as fair trade legislation. That is the only way we will be able to guarantee jobs and smaller producers some degree of livelihood.

Trevor Sargent (Dublin North, Green Party)
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In response to the questions from Deputies Doyle and Sherlock, I must point out that the ombudsman is the vehicle for the legally enforceable approach to the situation. For example, I would envisage that the ombudsman will be able to insist on particular information being divulged, be it in respect of promotion funding and how the supplier is expected to pay for it or overall profits. I believe these issues must be addressed. We know that the multiples are not telling the whole story. They claim this is because their competitors are not telling the whole story. However, two wrongs do not make a right. This issue must be addressed.

The report from the retail-related import and distribution study states in its concluding remarks that this concentration of retail power ultimately means that consumers have less scope to shop around. That is where I believe all of us, including suppliers and farmers, need to focus our attention. Until we create different avenues of access to market, we will continue to battle with the titans of retail power. They are the ones who ultimately will have the last laugh unless we introduce alternatives which undermine their position.

Brendan Howlin (Wexford, Labour)
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We must move on to Question No. 32.