A report prepared by economist Jim Power – ‘Retail Price Compression Threatens the Viability of Irish Horticulture’ – details the intense pressure put upon primary producers of horticultural produce.
According to the report: “Retail price compression has forced many producers out of business and many more will be forced out of business if the imbalance in pricing power in the supply chain is not addressed.”
In response to the report, IFA President Tim Cullinan said that the Government should move quickly to restore the ban on below-cost selling of food and horticulture produce.
“The price compression at retail level has forced growers out of business. The most recent National Field Vegetable Census, which is now out of date, showed that the number of field vegetable growers fell from 377 in 1999 to 165 in 2014, a reduction of nearly 60%. It is clear from anecdotal evidence that this trend has continued in recent years,” he said.
Cullinan went on to say that the inputs crisis at farm level has become far more severe as a result of the war in Ukraine.
The report states that, “There is a strong need for a significant rebalancing of power in the food supply chain, to deliver a price for primary producers that would ensure their future viability. The powers given to the National Food Ombudsman should include:
- Full powers of investigation of margins in the various components of the food supply chain. A ‘retail charter’ should be signed up to by all retailers that would guarantee primary producers a certain margin above the cost of production. If retailers were not willing to sign up to such a charter, then it should become part of the regulatory environment.
- The tendering process must be changed in order to give certainty to primary producers and enable them to deal with the impact of unpredictable seasonality on food production.
- Retailers should not be allowed put their supply up for tender every year, as this causes unsustainable uncertainty for primary producers. The regulator should have the power to examine tenders to ensure that primary producers are paid a fair price.
- It must have regulatory oversight on labelling to ensure that mislabelling that confuses the provenance of product is not allowed happen.
- A ban on below-cost selling must be introduced. It’s rarely in the best interests of the market to have a considerable level of regulatory intervention, but if market failure occurs, then it is necessary.”
Read the full report here.
