FARMERS RECEIVE as little as one-fifth of the retail price paid by consumers for staple produce, the Irish Farmers’ Association told the Oireachtas committee.
IFA president Pádraig Walshe said the dominant position of the large retail groups in Ireland and across the EU was forcing down the prices paid to food suppliers to totally unsustainable levels.
Food processors and farmers were competing relentlessly against each other for shelf space, while six major buyers from the supermarket chains ratcheted up their demands, at the same time as they pushed down the price.
“The situation is intolerable. Producers and suppliers are so fearful of the power the supermarkets wield over them, they are scared into silence and submission lest they be delisted at the whim of a buyer.”
The price farmers received for their goods ranged from 19 per cent to 54 per cent of the final retail price, he said.
A farmer received just 70 cent for a bag of potatoes selling for €3.74, for example, and 88 cent for a pack of cheddar cheese retailing at €3.96. He earned €2.09 for a kilo of bacon costing €8.08, and 36 cent for a litre of milk costing €1.13.
The best return was on beef, which earned the farmer €4.81 from a retail price of €8.97. Mr Walshe attributed this to the IFA’s campaign against beef imports from Brazil.
He said retailers also imposed additional costs on producers, such as packaging and transport, “hello money” to get products on shelves and long-term rebate agreements where supermarkets demand end-of-year payments.
Ann Fitzgerald, chief executive of the National Consumer Agency, said she didn’t believe the extra costs of doing business in Ireland could account for the “vast differential” in prices between North and South.
None of the explanations she had heard – which included hedging, world commodity prices, supplier costs and business costs – held water at this stage.
Chris Martin, managing director of Musgraves, estimated the gap in prices across the Border had widened from almost 20 per cent last November to almost 30 per cent now. Of this, he believed about one-third was due to the extra cost of running stores, while the rest was attributable to currency fluctuations.
Aldi chief executive Donald Mackay said operating costs were higher in Ireland: electricity and cash-in-transit costs were twice what they were in the UK; and bank charges were at least 10 times higher.
He said Aldi sourced over 40 per cent of groceries sold in its stores in Ireland, but this produce was more expensive. “You don’t get the economies of scale from selling to four million people here that you get with 60 million in the UK or 80 million in Germany.”
