The Irish Republic has too many supermarkets and producer prices are being squeezed to pay for the over-capacity, a parliamentary committee was told last week.
John Bryan, president of the Irish Farmers’ Association (IFA), claimed “the serious over-capacity is self-evident” and was impacting directly on returns to primary producers. He called for an investigation into the expansion of retail space over the past decade and urged local councils to be more circumspect in granting planning permission for such developments.
“In a small country like this, with four million people, building hypermarkets on the edge of towns is of no benefit to local people,” he said. “Instead, it wipes out local shops and convenience stores, the lifeblood of communities, and damages established businesses in town centres. We should learn lessons from what has happened elsewhere.”
The IFA leader told the committee, which is investigating the retail grocery sector, that all expansion plans by the multiples should be frozen until a new statutory code of practice had been put in place to regulate the relationship between them, the producers and suppliers. The fact that Tesco had recently reported a €260 million (£225.3m) profit on its Irish operation, while average farm incomes had fallen to €13,000, was “clear evidence that the food supply chain is broken”, said Bryan.
Multiples were enjoying profit margins of 10 per cent, he claimed, while producers were getting, on average, one-third of the retail price. Horticulture, he said, was under particular pressure from retailers and would not survive the ongoing supermarket price war if the government did not take action to rebalance the market.
IFA general secretary Pat Smith, who also testified, told of potatoes being bought by the multiples for €150 a tonne, despite the cost of production being double that, and then sold at retail level for the equivalent of €600 a tonne. When growers protested, the multiples said they estimated the production cost at €135 a tonne and felt €150 was “a reasonable price”.
Given the power of the multiples, regulatory action was urgently needed at both EU and local level, said Smith. The economic basis of food production was being threatened, not just in Ireland but also across Europe. “It’s that serious,” he told the committee.
