As a price war in grocery items was launched in Cork by Dunnes Stores against the Germanowned Aldi group, the Irish Farmers' Association warned that short-term gains for consumers would result only in damage to producers, retailers and the industry.
Dunnes announced in an advertisement in the Examiner yesterday it would under-cut the Aldi prices by 1p on basic lines in six of its stores.
It said it would sell bread at 34p, Irish milk at 88p for two litres, six medium-sized eggs at 38p and sugar at 1p below the price offered by Aldi at its Ballincollig, Cork, and Dublin stores.
When asked to elaborate on its pricing policy, a spokesperson for Dunnes said it would be making no comment.
However, it was learned the prices in Dunnes would apply in its four Cork stores and its Henry Street and Earl Street stores in Dublin.
A spokesman for the Competition Authority said last night it was aware of the Dunnes announcement and welcomed the competition for the consumer.
He said the authority would continue to monitor the situation.
But last night the IFA, which had been reprimanded for picketing the Aldi store in Cork because it was selling milk at 20p per litre below the normal retail price, said it was disturbed at the development.
"A trade war is ultimately damaging to the producer, the retailer and the industry and no one really wins in the end, " said an IFA spokesman.
Ten days ago, milk producers in Munster held a protest meeting outside the Aldi store in Ballincollig where Mr Tom Parlon, IFA president, accused Aldi of exhibiting the worst aspects of a "ruthless, multinational retailer", acting as a conduit for imports in a way that would crush local suppliers.
The IFA milk suppliers were angered by Aldi offering milk from Northern Ireland at 89p for two litres.
Locally produced milk was being sold in Cork at 114p per two litres.
Sources in the milk producing area said last night that Dunnes Stores was also sourcing some of the milk it was offering in the North, but was also offering own-brand and locally produced milk. The IFA had been warned by the Competition Authority that Aldi was free to sell the Northern produced milk because it did not constitute below-cost selling.
It warned that any attempt by any association to interfere with the retailer's right to set its own price and to seek to raise that price, would be in breach of the Competition Act.
That warning came a week after IFA sheep farmers entered Iceland stores in Dun Laoghaire and removed New Zealand lamb from fridges.
This action forced the company to replace its New Zealand stocks with Irish lamb.