A farm leader predicted yesterday that the price of milk, bread and cereals could rise permanently by up to 40 per cent over the next four years and the era of cheap food was over.
Jackie Cahill, president of the Irish Creamery Milk Suppliers' Association, told the agm of his organisation that those talking about the rising price of food should remember the real price of food had fallen by over 60 per cent in the last 50 years.
Mr Cahill said the idea of food inflation was "a myth" because of this, and said the farmer's share of the retail price of beef had fallen from 60 per cent in 1983 to 44 per cent this year. He said the farmer's share of retail milk had fallen to 33 per cent.
"The fact of the matter that is often forgotten is that on average, Irish households spend more on alcohol and tobacco than they do on food consumed in the home," Mr Cahill told the 350 delegates attending the event in Limerick racecourse.
"Certain parties seem determined to hype the possibility of runaway inflation in food, but the facts are that food has played a decreasing role in the calculation of the Consumer Price Index," he said.
He said consumers concerned about rising food costs should be looking at the retailers who were gaining a bigger proportion of the checkout price year on year.
He said that this "hype" was best illustrated by the example of wheat, where the talk about the impact of grain prices and the price of a standard loaf was completely wide of the mark.
"The cost of wheat for a standard loaf is a mere eight cents of the total price. Thus, we calculate that even if wheat were to permanently increase by 40 per cent, it would add no more than 3.5 per cent to the price of a standard loaf of bread."
Ciarán Fitzgerald, the independent food consultant, attacked the Competition Authority as being "naive and one dimensional" in relation to food prices because of its singular belief that competition between multiple retailers would keep consumer prices down.
"Food and food production is a multi-dimensional issue. It is not just about price. It is also about sustainability, profit for producer and processor, quality and health and wellness," he said.
Tara Buckley of RGdata, the independent grocery organisation, supported Mr Fitzgerald's stand on the authority, adding that on the authority's own criteria there should be only one large supermarket in Ireland, a Wal Mart, in Portlaoise where every consumer in Ireland should shop. "The fact is that in all the surveys on food prices it emerges that food is dearest in Dublin where the majority of the trade is controlled by the multiples. Food is cheaper where there are independent operators who have to compete."
There were differing opinions between Mr Cahill and the Minister for Agriculture, Mary Coughlan on whether or not farmers should expand their milk production over the next few years. Mr Cahill argued that an increase in milk quotas above the demand for milk was a recipe for the collapse of the price and would completely undermine the confidence of the dairy sector.
However, the Minister told the conference she had asked for a 3 per cent increase in Ireland's quota. She said quota restrictions were preventing farmers expand to meet the world demand which currently outstripped demand.