Food sector seeks support

FOOD AND Drink Industry Ireland (FDII) has called on the Government to introduce a new legal framework to ensure the survival of the Irish food industry, which it says is struggling to cope with the “coercive practices” employed by large supermarkets.

Large retailers are increasingly sourcing products and brands from the UK, bypassing Irish suppliers, and putting 230,000 jobs in the agri-food sector at risk, according to Shane Dempsey, head of consumer foods at FDII.

FDII wants competition law to acknowledge that the power held by certain retailers over some food suppliers is monopolistic.

Mr Dempsey said indigenous food suppliers would be forced out of business, leading to mass layoffs and a more homogeneous market for consumer foods.

A weak sterling is compounding the problem for food suppliers, as UK-owned retailers can import produce at lower prices while Irish exporters find it impossible to recoup their manufacturing costs.

“Food suppliers are struggling to meet the increasingly difficult demands of retailers above and beyond normal contractual negotiations on price,” Mr Dempsey said.

“These include funding retailers’ marketing initiatives and promotions.”

The European Commission is currently examining a number of options in relation to curtailing the power of dominant retailers, including the setting up of a retail-monitoring unit.

The commission also favours the introduction of codes of conduct in the industry.

Mr Dempsey said the Government should act quickly to ensure that trading practices between grocery retailers and their suppliers are fair; that the benefits of existing competition are passed on to consumers; and that suppliers are not forced to pay for advertising, display of goods or other promotions.

As an exporting industry, a healthy food sector is considered to be vital to the recovery of the Irish economy.