Once again there was the usual competition among retailers at the National Ploughing Championships, with each trying to outdo the other in relation to showing their commitment to Irish producers.
Pictures of Irish suppliers were not only draped from the ceiling, as is now commonplace in retail stores, but we also had strong images of Irish produce displayed along every available inch of their marquees.
Few could dispute that displaying such images helps reinforce the high safety and environmental standards to which Irish food is produced. In this sense we should welcome retailers’ commitment to being present at the event and showcasing all that is good about our food industry.
However, where the misconception arises is that consumers walking out of the marquees and indeed supermarkets across the country could be forgiven for thinking that the retailer and farmer relationship is strong, fair and equitable. In the real world nothing could be further from the truth.
In many cases, it is the same food items used by retailers to promote their commitment to Irish farmers that are devalued simply to lure customers in.
It is a well-rehearsed strategy used aggressively by Irish and British retailers. The margin on Known Value Items (KVIs) such as bread, milk and meat is sacrificed only to be recouped by securing increased sales of the high margin items available across their stores.
Poultry farmers are the latest victims of such tactics. In recent weeks we have seen competition among retailers force the price of a whole Irish chicken down to just €3.
The move sees an Irish chicken, produced to the highest standards in the world, now with a similar price point to a cup of coffee, a tube of toothpaste or a large chocolate bar.
Expectations
The move to aggressively devalue consumer price expectations for chicken will have serious consequences not only for the poultry sector but the entire Irish livestock sector.
It creates product displacement, disrupting the normal consumer demand pattern for beef, lamb and pork, while also lowering consumer price expectations for the range of meat proteins.
Ironically the decision to devalue meat protein comes at a time when poultry, pig and beef farmers are all operating on wafer-thin margins.
This perhaps gives the best indication as to retailers’ true commitment to Irish farmers and in working with the industry to develop a sustainable supply chain.
It is easy to understand how some might argue that retailers selling a chicken for €3, or below the cost of production, are simply recognising the economic challenges facing consumers.
However, the reality is that offering a chicken for €3 is merely a marketing ploy. It is designed to attract consumers into stores and expose them to higher-margin products.
Despite the level of destruction caused to the primary production base from this type of promotional activity, the consumer gains little advantage when assessed across their basket of goods.
At this stage those engaged in the sector have seen through the empty commitments of retailers to deliver an equitable supply chain. We should see the large retailers for what they are – businesses driven by their shareholder base who demand the market share necessary to deliver short-term profits.
There does finally appear to be an acceptance at EU level that a supply chain where fresh food can be devalued by retailers to boost sales of higher- margin products is clearly dysfunctional and allowing it to be maintained is not in the long-term interests of the primary producer or the consumer.
In his state of the union address recently, European Commission president Jean-Claude Juncker spoke of the need to "break some retail oligopolies". EU agriculture commissioner Phil Hogan has repeatedly highlighted the need for fairness in the supply chain and has called on commissioner colleagues with responsibility in the sector to engage on the issue. Ultimate responsibility lies with the Danish commissioner for competition, Margrethe Vestager.
There can be no half-measures. If the commission is committed to delivering a truly sustainable supply chain it must be prepared to introduce meaningful legislation: legislation that prevents large retailers from abusing their buying power when dealing with a range of single-product suppliers and delivers the necessary transparency that enforces equitable distribution of the consumer price across the supply chain.
Justin McCarthy is editor of the Irish Farmers Journal