Farm Ireland

Friday 28 October 2016

Vegetable growers have little to cheer about

Below cost selling of vegetables is a huge issue for the horticulture sector

Grace Maher

Published 09/12/2015 | 02:30

Kenneth Keavey has built up a thriving organic vegetables business on 18ac at Corrandulla in Co Galway
Kenneth Keavey has built up a thriving organic vegetables business on 18ac at Corrandulla in Co Galway

There is a big focus on food in this year's Christmas advertising with all sorts of products competing to make it onto our tables for the all-important Christmas dinner.

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Vegetables pay a central role in these lovely Christmas campaigns, but many growers don't have a lot to be merry about at Christmas.

Below cost selling of vegetables is having a serious impact on growers and threatening the survival of the horticulture sector in Ireland.

Earlier this year the EU Commissioner for Agriculture, Phil Hogan called for "all players in the food chain to recognise that it is imperative that producers get a decent return for their raw material".

The continued practice in Ireland of selling fruit and vegetables well below production costs - especially at Christmas - gives the illusion of value to the customer.

Retailers are able to sell fresh produce as 'loss leaders' to attract footfall into their shops, resulting in increased spend on other items.

Production costs and food waste

The long term impact of below cost selling for growers is lower prices for their goods. The Irish horticulture sector has a farm-gate output of €395m, 85pc of which is edible horticulture, and the remaining 15pc amenity horticulture.

Research has shown that fruit and vegetables make up approximately 14.5pc of an average grocery shop.

The horticulture industry is a significant employer, with much higher employment rates per land area than other agricultural sectors. Labour is a very high cost for all growers and must be reflected in the end price paid by the consumer.

Selling food below production costs leads to increased food waste. People buy more than they need because it is cheap, and ultimately throw a large proportion of it away. With household food waste averaging 30pc of all food purchased, below cost selling contributes to increased waste which is not reflected in the cheap price of the goods.

The reality in Ireland is that there are fewer growers in the industry and it is difficult to attract younger people to the sector.

Price wars between retailers, where growers are the losers, will do irreparable damage to our indigenous industry.

Organic advantage

Below cost selling rarely takes place in the organic sector, however it can impact indirectly.

But the conventional and organic horticulture markets show a slightly different picture.

The conventional sector is populated by growers who mainly specialise in specific ranges of vegetables, grown under contract to the major retailers.

In organic horticulture the majority of growers produce a range of crops, some of which are sold to the multiples but the majority is sold directly to consumers, giving more flexibility to growers.

Organic growers tend to farm on smaller land parcels, and ensuring highest returns often means selling directly to the public, this spreads the risk for growers but also brings additional costs.

Regardless of whether it is the organic or conventional horticulture sector, we are still far too reliant on imports, even once seasonal constraints have been taken into account.

We need to produce more Irish fruit and vegetables, and consumers need to pay a realistic price for them.

However the policy of continued below cost selling by the retailers using fresh produce as loss leaders seriously threatens the viability of the Irish horticulture market.

Grace Maher is development officer with the IOFGA,

'Our business wouldn't survive if we got involved in below-cost selling'

Kenneth Keavey, from Green Earth Organics in Corrandulla, Co Galway is keenly aware of how competitive the market is. However he is also aware that he is producing top quality crops for an expanding market.

Production costs associated with his business must be met and he cannot get involved in below cost selling, or else his business would simply not survive.

Formerly a chemist working in the biotech industry, Kenneth and his wife Jenny came back from the UK in and started their own organic horticulture business in 2005.

Green Earth Organics gained its full organic certification with IOFGA in 2006.

The farm now consists of 18ac of field-scale organic fruit and vegetables, including five large polytunnels.

Close on 56pc of produce is sold through their box scheme or online; 33pc is sold to restaurants and supermarkets and 11pc is sold at their farm shop and farmers' markets.

The box scheme is a core part of the business and Kenneth excels in the quality service he offers.

"We deal directly with a lot of consumers, the majority of whom are very supportive of what we do.

"They value the process of growing top quality food organically, and are willing to pay us a fair price to continue to do that. They are connecting with what we are doing at a farm level, they want to understand it and be part of it.


"Price is of course an issue, and below cost selling impacts on all growers, but more importantly it sends out the message that fresh food is cheap.

"Growers suffer, but supermarkets carry on by picking up sales in other areas. As small scale growers we do not have that luxury," says Kenneth.

Green Earth Organics has recently expanded into Dublin taking over an existing organic box scheme, and they now deliver to the greater Dublin area.

Kenneth currently employs 13 people on his farm in Galway, and is taking on an additional six staff in Dublin.

Considering the size of the farm, these numbers are impressive and truly illustrate how paying a fair price for food can impact positively on both the rural and urban economy.

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