Colm Keaveney (Galway East, Labour)
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The day of action yesterday highlighted a number of issues, one of which was the continuing problem with inequality in the food supply chain. The Minister will know there exists a large arms inequality, with the farmers on one side and the supermarket chains on the other. Three such chains, Tesco, Dunnes Stores and Musgrave Retail Partners now account for more than 70% of the supermarket sector and as a result prices paid to the producer are driven down by these organisations.

This is as a consequence of practices which include the payment of hello money, obliging producers to "pay to play", trade agreements which incorporate large rebates to retailers and forced contributions towards stores' discount campaigns. I wish to focus on these practices and ways in which they might be addressed.

As the Minister is aware, in 2010 the IFA produced a report entitled Equity for Farmers in the Food Supply Chain. The latter contains many recommendations in the context of striking a balance between producers and retailers. I hope that, like me, the Minister agrees with many of those recommendations, some of which relate to the forthcoming legislation. In the absence of achieving the balance to which the IFA's report refers, the farming industry could potentially become unsustainable in view of the relentless drive to reduce prices and protect the bottom-line profits of supermarket groups. EUROSTAT has indicated that retailers in this country enjoy margins in excess of those which obtain in other European countries. Consumers can sometimes benefit as a result of this. In the main, however, it is the shareholders who enjoy significant benefits.

It must be noted that people's diets are becoming increasingly unhealthy. I refer in this regard to the ever-growing presence of processed food in, for example, children's lunch boxes. Such foods contain large amounts of fats, salts and sugars and this is having an impact on the health of the citizens of the nation. They Minister may inquire as to how this matter relates to him and his Department. Processing food is a cheap way to maximising profits, especially in the context of the packaging, marketing and other tools that can be used to promote such food. The tools to which I refer are essentially used to drive down the costs relating to products. I went to my local supermarket at the weekend and discovered a colourfully packaged packet of processed cheese that is obviously aimed at children. The cost per kilo for this product is €2 and the price paid to the farmer for the milk required to produce it is just over €3. While it can be claimed that some of these products are Irish in origin, I understand that some of the milk used in a number of them is sourced from Canada or the Netherlands. It is possible to obtain genuine, non-processed cheese such as Gubbeen Cheese, from Cork, or Kileen Farmhouse Cheese, from my constituency for a great deal less than €24 per kilo. It must be stated that there is a sizeable differential between €24 and €3.

I ask the Minister to outline Government policy in respect of this matter. How is it intended to address the fact that those who mass produce processed food are receiving greater rewards than those who provide quality local products? How does the Government intend to ensure that food will be less commodified in order that local suppliers will be encouraged in their efforts? Will the Government consider introducing policies aimed at addressing the issue which arises in the context of food quality and people's diets? I would be grateful if the Minister could comment on my concerns regarding hello money, arrangements relating to retailers' power to impose licensed trade agreements - which contain built-in rebates - on producers and the fact that people are being obliged to make forced contributions in respect of stores' discount promotions. These practices are unacceptable and we must introduce the necessary regulations in order to ensure that the issue of social justice that exists in the context of retailers and producers can be addressed.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank Deputy Keaveney for raising the issue of the relationship between the various stakeholders in the food supply chain, which has been the subject of much debate not just in Ireland but across Europe for some time. As the Deputy indicated, there is a sense that there is an imbalance of power between suppliers and the substantial retail chains. At national level, suppliers and distributors in the food sector have contended that there is a real imbalance whereby retailers are transferring risks which are properly their responsibility onto suppliers by means of unfair practices such as money being demanded in respect of promotional offers etc.

Deputy Keaveney made specific reference to hello money, pay to play and forced contributions to store discounts. These are some of the practices which are a cause of concern. As the Deputy is probably aware, the relevant 2006 legislation specifically outlawed hello money and other such practices. The difficulty has been that while these practices are outlawed, enforcement has not proven possible because no one has come forward to highlight cases where the abuses have occurred. Accordingly, the programme for Government contains a proposal to enact legislation that would lead to the introduction in the grocery sector of a code of practice that would have statutory effect. The idea is to try to establish a code of good practice in respect of many of the different issues involved, namely, payments for marketing costs, shrinkage, wastage within stores, positioning of products within stores, special promotions, forecasting errors, etc. We must ensure that these issues are covered within a code that will give rise to a fair sharing of the risk between those on both sides.

We are determined to introduce the legislation to which I refer. The enabling power will be provided for under the competition and consumer Bill, which is currently on the A list and which should be brought forward during the current session. It is clear that there is a need to strike a balance between the two sides and also to ensure that there is fairness.

Deputy Keaveney raised much broader issues in the context of how we might ensure that consumers will have the opportunity to choose better dietary products. Such issues go well beyond fair trading rules and would probably be better raised with Ministers who deal with nutrition and matters of that nature. I accept what the Deputy says but the rules laid down under the Competition Acts are designed to enforce the free market and ensure the people will have a choice and will not be unfairly forced to pay high prices. That is what we seek to police. The choice in respect of competing products on supermarket shelves must be determined in the context of education and tax policy, particularly in the context of the fact that certain products are treated differently for tax purposes.

Colm Keaveney (Galway East, Labour)
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On the notion that people are being unfairly forced to buy products, 70% of the market is controlled by 70% of a minority of players, namely, Tesco, Musgraves and others. In such circumstances, a balance must certainly be struck between producers and retailers. I referred earlier to a particular processed cheese which is colourfully packaged, which is obviously aimed at children and which retails at €24 per kilo. If an Irish farmer is fortunate enough to supply the milk used in producing this cheese, he or she will be paid €3 for his or her trouble. There is a significant differential between paying €3 for milk and €24 per kilo for processed cheese. Local artisan cheeses such as Gubbeen Cheese from Cork or Killeen Farmhouse Cheese from Galway cost less than €24 per kilo but the farmer who supplies the milk will still be paid €3 for it.

I understand the necessity of striking a balance. I am of the view, however, that we must create a whistleblower system in respect of the criteria that apply, particularly because producers are fearful of offering evidence regarding the unfair or unacceptable practices or arrangements being imposed on them by retailers. I ask the Minister to take account of the fact that much more regulation is required. An iron fist must be brought bear. In addition, we must begin to tackle this issue in the context of social justice. It is small producers, rather than Tesco, Musgraves and those others who control 70% of the market, who must be protected.

Richard Bruton (Dublin North Central, Fine Gael)
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I take Deputy Keaveney's point. We have a number of instruments in our armoury such as the rules concerning abusive dominance to prevent a dominant market player who uses certain practices. Cartels are not permitted to collude against the interests of suppliers. We propose to introduce a code of fair practice to govern dealings between suppliers and retailers. We are not seeking to remove from the picture the normal negotiations that accompany contracts. We cannot set margins or prices as this would be well beyond our capacity and it would not be in the public interest as there needs to be competition and keen pricing. We want to ensure fairness in the market and to allow opportunities for complaint without fear of reprisal. I will consider the Deputy's suggestion for whistleblower provisions. One of the fears of suppliers is that they would be delisted if they made complaints about practices. We seek to overcome this issue by putting in place a code of fair practice and making arrangements for complaints to be made in confidence. Prosecution requires witnesses and that has always been the problem in other European countries where codes of this nature exist. We are seeking to adopt best practice. The European Union has a policy of achieving greater fairness in such business dealings but there is a problem gathering evidence and finding witnesses. The legislation will advance the situation significantly and it will be before the House shortly.