Joe Costello (Dublin Central, Labour)
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Question 25: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if she is satisfied that the abolition of the Groceries Order has resulted in the reduction in prices that were forecast by her Department when the decision was made; and if she will make a statement on the matter. [23925/08]

Bernard Durkan (Kildare North, Fine Gael)
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Question 41: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the action she has taken or proposes to take to address the issue of the rapid increase in the price of consumer goods with particular reference to food prices and the suggestion prior to the abolition of the Minimum Prices Order that its abolition would generate greater competition and lower prices; if she has examined the circumstances whereby it appears that the reverse is the case; the action she proposes to take; and if she will make a statement on the matter. [23935/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 25 and 41 together.

The Restrictive Practices (Groceries) Order 1987 was revoked by the Competition (Amendment) Act 2006 with effect from 20th March 2006. During the debate that surrounded the removal of the Order my predecessor, Mr. Micheál Martin, indicated that increased competition in the market should lead to prices being cheaper than they would be if the Order remained in place.

Following the enactment of the 2006 Act, Minister Martin asked the Competition Authority to review and monitor developments in the grocery sector in light of the new regulatory environment. In its Report, "Price Trends in the Irish Retail Grocery Sector: A Description of the Evolution of Retail Grocery Prices between 2001 and 2007", published in March 2008, the Authority reports that during the initial nine month period, April to December 2006, following the removal of the Groceries Order, the price trends for Groceries Order items and Non-Groceries Order items behave very differently. The price trends move in opposite directions, with the price of Groceries Order items falling and the price of Non-Groceries Order items rising.

This is the first time that such a divergence between the Groceries Order items and non-Groceries Order items occurred since 2001. The Authority's view is that this may indicate that a structural change has occurred in the price trends for Groceries Order items and Non-Groceries Order items and may reflect a period of price adjustment by retailers who were free to use price enticements to compete.

However, since the beginning of 2007 the price trends for Groceries Order items and Non-Groceries Order items appear to behave similarly, with both trends rising. Towards the end of 2007, the rise in the price of Groceries Order items is steeper. This trend however is not an issue particular to Ireland as rising food prices are being experienced right across the world due to a number of factors including climatic, economic and demand reasons.

The global biofuel industry is causing fundamental changes to agricultural markets and is likely to keep the prices of agricultural commodities high over the next decade. A rise in input and transportation costs consequent on increased fuel and energy prices has also contributed to the increase in biofuel production. The resulting loss of significant tracts of potential food-producing land in favour of the bio-fuel industry has pushed up the cost of the animal feed used by dairy farmers. This has also coincided with surging demand for meat and dairy produce in India and China, as their economies and diets become more westernised. Nearer to home, persistent rain in Ireland last summer had a significant effect on crops such as cabbage, cauliflower and broccoli with up to 50% of some growers' yields being severely affected. Grain prices in Ireland continue to rise with the realisation that wheat harvests in most regions did not deliver as expected which in turn has increased the price of barley. In terms of food prices into the future, it is likely that the demand, economic and climatic reasons which underlie the recent price increases may continue to be experienced for some time.

Government policy insofar as the price of food to Irish consumers is concerned, is focused on promoting a competitive grocery market and raising consumer awareness in relation to the need to get the best value for money when doing their grocery shopping. In this regard, the National Consumer Agency has carried out a Grocery Price Comparison Survey in the area of food prices. The results of the survey found that food prices are on a strong upward trend primarily due to international factors. The Agency concluded that consumers can force more competition in the grocery sector by informing themselves of the prices of products charged by different retailers and shopping around, if they have sufficient choice, and not necessarily doing a "weekly shop" in the one outlet.