Mary White (Fianna Fail) | Oireachtas source

It is a pleasure to welcome the Minister of State to the House. The report of the Oireachtas Joint Committee on Agriculture, Food and the Marine, "Report on the Grocery Goods Sector - Increasing Equity and Transparency in Producer-Processor-Retailer Relationships", is based on extensive hearings by the committee on the draft statutory code published by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton. It is up to the Minister and the Government to make up their minds on this issue, taking account of the report of the committee as well as the deliberations in Seanad Éireann.

I commend the joint committee, particularly its Chairman, Deputy Andrew Doyle, on the seven days of hearings it arranged between March and July last which offered the key participants in the grocery sector an open and fair opportunity to set out their position and respond to the considered questions of the committee. I acknowledge the contribution to the committee of Senators Michael Comiskey, Paschal Mooney, Mary Ann O'Brien, Brian Ó Domhnaill, Susan O'Keeffe and Pat O'Neill.

I speak with conviction today as I spent 16 years working for 24 hours a day, seven days a week with the grocery trade in Ireland. I know the trade intimately and am a big admirer of it. The Irish grocery sector impacts on every parish in the country as a source of employment and producer of food products and it impacts on every citizen as a purchaser and consumer. There is an inherent tension between our fellow citizens as suppliers, who are seeking the best price for their produce, and all of us as purchasers, who are seeking the best value and price in our purchases. The recession and the consequent cut in our disposable income have meant that consumers are looking for better value more than ever. A recurring theme from the grocery trade during the hearings was that consumers are strapped for cash and are intent on seeking out the best value. We, as consumers, are putting pressure on the retailers to give us cheaper prices and better value.

It is a recurring theme in Ireland that the multiples and convenience groups are creaming off excess profits and that the grocery sector is not truly competitive. It is hard to argue that the sector is not competitive when we see the impact of the arrival and continued expansion of Lidl and Aldi and their steadily growing market share. Again, the case has been made that average food prices here were considerably higher than the European average, while ignoring the fact that we have the highest minimum wage costs in Europe aside from Luxembourg. We have seen Irish grocery prices which, in 2008, were 37% higher than the EU average drop to 18% higher over a period of two years. The narrowing of prices with our nearest neighbour, the UK, is even more dramatic. Our grocery prices were 62% higher than those in the UK in 2008, but that differential has dropped dramatically to just 4%. This was the testimony from the Competition Authority at the joint committee's hearings. A drop from 62% to 4% must be put on the radar.

Of course, we all want a fair deal for the supplier, retailer and consumer.

How much State intervention is needed and justified, given the actual fierce competition in the grocery sector and the significant lowering of Ireland's higher prices, by comparison with other European countries? This country is proud to operate an open economy with transparent pro-development laws. One of the benefits of this approach has been a consistent inflow of foreign investment, jobs and exports. As part of his work to promote foreign investment in Ireland, the Minister, Deputy Bruton, is seeking to ensure Government actions do not place Ireland at a disadvantage as a welcoming country for investment and enterprise.

I am concerned about the possible implications for Ireland's reputation as a friendly country for foreign investment of the interventionist tone of some aspects of the committee's report. I have particular concerns about the sixth recommendation, which is "that legislation should be introduced to force the publication of profits and turnovers of the large multiples and large processors operating in this country". In page 21 of its report, the committee expresses "serious concerns about the use of own-brand products". Surely it is far too interventionist for legislators to become involved in the marketing strategy of retailers.

The committee's report fairly sets out the arguments presented to it in favour of and opposing the introduction of a statutory or voluntary code of conduct or code of practice for the grocery trade. It ultimately comes down in favour of the introduction of a statutory code in its first recommendation. I have to admit the arguments are finely balanced. However, I have an overriding concern that we should not put our enterprises at a disadvantage by comparison with our EU partners generally. As the Minister of State has said, the preparation of an EU code is at an advanced stage. It will incorporate a set of principles aimed at achieving transparency and equity. Apparently, it is supported by the supplier and representative bodies at European level. Its publication is due shortly. I ask the Minister of State to set out his views on the proposed EU code. Does he think it might be more prudent to align Ireland with the EU code, rather than going it alone?

It is easy to stereotype the convenience store groups and the multiples as baddies that are focused on ripping off all suppliers. I suggest that members should review the testimony and exchanges of the Musgrave Group, which includes the Centra and SuperValu stores, and of Tesco Ireland at the joint committee on 26 March last. The representatives of the Musgrave Group described how they work proactively and positively to source Irish food. My local Centra retailer, Ms Breda Cahill, has three stores and employs 74 people. She stated frankly at the joint committee meeting that "without our retail partnership with Musgrave, its integrity and the way it does its purchasing, I would not be here today".

At the same meeting, the former CEO and current chairman of Tesco Ireland, Mr. Tony Keohane, described that company's positive programme of engagement with Irish suppliers. He mentioned that Tesco has "400 Irish suppliers", over 70 of which had been engaged in the previous year as part of a proactive programme with Bord Bia programme. He pointed out that Tesco's food exports from its Irish suppliers to its outlets elsewhere are worth approximately €700 million per annum and account for "9% of total Irish food and drink exports". Scores of Irish companies have got started in export markets through Tesco outlets abroad. One of those companies is Lir Chocolates, which would not employ over 200 people in Navan and spend €20 million in the Irish economy if it did not get started by selling to 700 Tesco stores in the UK. I thank my colleague, Senator Quinn, who gave us our first opportunity on the Irish market. I also thank Tesco for giving us our first opportunity to export. Connie and myself actually started in the North before going to the UK.

I would like to draw the Minister of State's attention to the forthcoming forum on revitalising retail, which I will host on 12 December next along with Don Nugent, who is the director of Dundrum Town Centre. The forum will be led by Sir Terry Leahy, who is a former CEO of Tesco plc and is currently a senior adviser at Clayton, Dubilier & Rice. Competition is fierce in the retail trade, which employs 250,000 people in this country. Companies and retailers have to cut prices. We tend to forget that a range of jobs and professions are involved in the retail trade.