Multiples in the Irish Republic have been warned that excessive profit-taking will damage the country’s food industry, which supports 230,000 jobs.
Agriculture minister Brendan Smith, who sounded the warning, said large supermarket chains needed to remember that their responsibility does not stop with the consumer and their shareholders - it must also extend to producers, processors and suppliers, who have invested heavily in building up the food industry. They needed an adequate return to ensure a system of sustainable production.
The minister, speaking at a conference in Dublin of the International Federation of Agriculture Producers (IFAP), claimed that at present, the returns to the primary producer and the processors were not adequate. Echoing a criticism made at ongoing farmer protests, he cited the fact that producers get only a fraction of the price the retailers charge the consumer.
The minister described this as “an unsustainable position” that begged the question of where the profits went. “While acknowledging that retailers must strike a balance between value for the consumer and a fair return to suppliers and producers, I have left the multiples in no doubt that this cannot be done at the expense of a viable agri-food sector,” he said.
Asked if supermarkets risked damaging the food industry by continuing to take their current levels of profits, he replied: “Absolutely. That would be of serious concern to me.” He added that one of the factors behind the declining share of consumer prices passed on to producers was the concentration of power at retail level, which had changed the negotiating balance in the food chain.
He hoped that the new retail code of practice being drafted by government would change that and ensure “a fair and balanced return” for all parties involved in the industry. According to Mr Smith, this issue is also being tackled in Brussels, with EU Agriculture Commissioner Marianne Fischer Boel ordering a review of anti-competitive practices in the retail sector.
She is due to report back to the Council of Ministers by the end of the year, he said, “and I am waiting with interest the outcome of her review.”
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