May 11th, 2009

Farmers say Government must re-introduce Groceries Order to regain control of Food Sector

The President of ICMSA, Jackie Cahill, has stated that it will be necessary for the Government to re-introduce the Groceries Order if it is to re-gain control of the food sector from the giant retail multiples who Mr Cahill accused of operating grossly excessive "Paddy" margins while forcing their Irish suppliers to supply them at below-cost prices.

Mr Cahill said that from the moment the Groceries Order was suspended in March 2006, the giant retailers had effectively taken over the sector and now dictated national food policy. Mr Cahill said that the Government had effectively abdicated responsibility and ceded control to massive conglomerates who were now in a position to take in produce every morning at below-cost prices that they have dictated, show it to a fridge, and sell it two hours later taking the lion's share of the profit margin. Even more unfair was the practice of dropping the prices paid to suppliers of household staples like milk to below-cost levels and then using those products as 'loss leaders' to attract customers into their supermarkets where they the retailers will make their profits through selling other discretionary items.

Mr Cahill said that we had arrived at a situation where milk suppliers were receiving below-cost prices for their milk and effectively subsidising the more profitable lines and products.

"The real tragedy here is that all this was eminently predictable: the day the Groceries Order was suspended, ICMSA said that we were inviting the kind of free-for-all and deregulated, race-to-the-bottom that ensured that the primary producers would end up having their prices battered down by these huge retailers who would effectively end up deciding who in Ireland could by what and how much they would pay for it. And that's exactly what has happened. In the same way as our banks were allowed to escape any serious attempt at supervision or regulation, we now see multiple retailers actually making their own markers through their sheer power and the result is a situation where they can sell food below the cost of production and force the poor, bankrupted, farmers and primary producers to carry the loss. It was an absolutely idiotic decision at the time and is now proved to be such", said Mr Cahill, who pointed out that compelling suppliers to sell at below-cost prices was a text book definition of abuse of dominant sector position.

"Where's the Competition Authority in all this?" asked the ICMSA President.

It's time for the Government to admit the stupidity of the original decision and re-introduce a Groceries Order that forbids the sale of food products below cost price. Allowing the one element of any sector to become too powerful is what has brought the country to its knees. Is it not time that we learned our lessons and stopped this kind of commercial abuse?"

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