Legislate for large retailers to display the amount they pay to farmers alongside the sales price - An Taisce

27th April 2014
Press Release

The An Taisce proposal would require Ireland’s 5 largest retailers to display the amount they pay to farmers for certain foods – the “Primary Produce Amount” - alongside the sales price; the aim of the reform is to empower consumers to make an informed choice on below-cost selling

An Taisce, The National Trust for Ireland, says consumers are entitled to know whether the food they are buying is being sold below what farmers receive for producing it. So new legislation is needed to ensure large retailers display the rate they pay to farmers alongside the retail sales price.

“Recent surveys indicate that two thirds of consumers say that below-cost selling is against the long-term interests of customers while almost 90% back a call for new legislation to help ensure farmers get a fair price[1]”, said James Nix, An Taisce’s Policy Director. “The next step is to facilitate informed choice”, Mr Nix said, “and it will remain impossible to avoid below-cost food until the amount paid to the farmer is shown alongside the sales price”.

“The Government has the opportunity to aid informed choice. And ensuring the Primary Produce Amount is displayed alongside the sales price is a clear and tangible step that Ministers can take regarding the below-cost selling which is endangering Ireland’s horticulture sector”, he said.

In terms of the legislation itself, An Taisce suggests that it provide for:

  • A list of foods (e.g. carrots, onion, potatoes, sprouts) where the Primary Produce Amount must be displayed alongside the sales price,
  • The option to add to that list by Ministerial order, giving in-built flexibility to the system, and
  • The law would apply to grocery retailers holding 5 per cent or more of the national market.

If the proposed legislation is accepted, the new law would apply to the big five grocery retailers - Tesco, SuperValu/Centra, Dunnes, Aldi and Lidl, all of which have market shares higher than 5 per cent.

At the end of last year the Director of the National Consumer Agency welcomed below-cost selling, suggesting it was “good for the consumer” [2]. However, An Taisce says that these comments have no long-term evidential basis, adding that they indicated a lack of awareness of the risks of concentrating market share around fewer and fewer grocery retailers. There is a particular risk of larger stores forcing farmers to stomach ultra-low prices as well as squeezing out rival shops that sell only, or sell mainly, fruit and vegetables on Ireland’s main streets.

For their part, farmers report being forced to take below-cost prices largely due to Ireland's highly concentrated grocery retail market [see notes below]. However, no individual farmer can speak out due to the fear of being dropped as a supplier [3], something which left unchecked carries wider implications for the rural economy.

“The costs are already being incurred by farmers, and consumers know the longer-term risks of inaction”, Mr Nix said; "the question now is whether Government is prepared to take simple steps to empower consumers make informed choices?"

For further information, please call:

James Nix, Policy Director, An Taisce Tel: +353 86 8394129 Charles Stanley-Smith, Communications Chair, An Taisce Tel: +353 87 2411995

email: publicaffairs@antaisce.org

Notes:

  • Five grocery retailers now control around 90% of the market. The three biggest – Tesco, Dunnes and SuperValu / Musgraves – each have around 25%, accounting for 75% of sales collectively, while Lidl and Aldi control a further 15% of the market.
  • Most of the above stores offered fruit and veg for as little as 4 cent per kilo in 2013/2014, but SuperValu / Musgraves did not reduce its prices below 19 cent (for e.g. carrots, Brussels sprouts and melons), saying that “it was concerned the race to the bottom on price by some of its competitors is a step too far and will ultimately lead to a reduction in food quality and job losses in the farming sector".
  • However, one commentator described SuperValu’s stance, which coincided with television ads by the retailer promoting 19c-per-kilo Brussels sprouts, as an example of “having your cake and eating it”.
  • http://www.independent.ie/lifestyle/health/beware-of-5c-veg-cheap-food-always-comes-at-a-cost-29907502.html.
  • For an example of large-scale sub 40-cent a kilo sales in April 2014, see, for instance, http://www.irishmirror.ie/news/irish-news/tesco-set-sell-fruit-vegetables-3389648.

[1] http://agriaware.ie/press/?article=31; http://www.irishtimes.com/news/consumer/most-consumers-against-vegetable-price-wars-1.1739299

[2] http://www.irishtimes.com/news/consumer/national-consumer-agency-chief-welcomes-grocery-price-war-1.1638858

[3] http://www.irishtimes.com/news/ireland/irish-news/let-them-eat-carrots-protesting-farmers-give-out-free-vegetables-1.1633043