A major expansion in the Irish Republic by market leader Tesco has been criticised by the Irish Farmers’ Association (IFA), which claims it will further reduce prices for producers and threaten the survival of local shops.
The expansion, which involves a €113m investment, will add an extra seven stores to Tesco’s current total of 120. It will also create over 700 jobs, according to the company, and has been welcomed by the Irish government.
But IFA president John Bryan questioned the reason for the expansion “at a time when over-capacity in the sector is self-evident”. He claimed the prices being paid to primary producers were being forced down to pay for the excess capacity, and called for the expansion to be put on hold until a new code of practice, “to ensure fair play for producers”, was put in place.
Tesco Ireland chief executive Tony Keohane said that in addition to benefiting consumers, the investment would provide a significant boost for local employment at “a difficult time for the Irish economy”. But the IFA leader questioned how many net jobs would be created, “given that many small shops and convenience stores are struggling to compete as the multiples continue to dominate and expand”.
Producers were not getting fair play in the food supply chain, he said, and “multiples would be better off fixing this fundamental problem rather than undertaking unnecessary capital expenditure”. Average farm incomes were €13,000 a year while some mutiples enjoyed double digit margins, which was “clear evidence the food chain is broken”.
Producers’ share of the retail price had declined significantly, he added, with horticulture under particular pressure. He cited a recent IFA report which found that on 10 kilos of potatoes, selling to the consumer at €7, the grower’s share was just €2.50. Similarly, on 1lb of mushrooms, priced at €2.15, the grower got 80 cents, and just 62 cents on a kilo of carrots, which cost the shopper €1.36.
