Friday 9 December 2016

A dysfunctional market hurts consumers and producers

Published 01/07/2010 | 05:00

THE price comparisons published by Eurostat this week confirm, once again, a dysfunctional food market, particularly in Ireland, writes Ciaran Dolan, general secretary of the Irish Creamery Milk Suppliers Association (ICMSA).

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Data on food prices, even within a member state, are a complex recipe. This makes comparisons across member states difficult.

However, Eurostat has produced a very readable and methodologically robust set of figures on food price levels across the EU for 2009.

While the important message from the data with regard to the European food market is the wide divergence in prices, what emerges in the case of Ireland is truly astonishing (see Table 1).

I have confined the comparison to seven countries which have recorded some of the highest food prices.

Of these, Ireland has the highest retail price for milk and other dairy products.

The full report from Eurostat says Cyprus is the most expensive in the EU for milk and dairy products but the data shows Ireland at the same level.

This is a truly remarkable figure. Given that more than 80pc of Irish milk output is exported, the question must be asked, who is actually gaining?

While I have no figures to show precisely who is taking unwarranted mark-ups, I can categorically show that it is not Irish dairy farmers.

Table 2 also shows the prices paid to farmers in the same seven EU countries for 2009.

Can the government agencies explain to farmers and consumers how it is that we have the lowest milk price paid to farmers, yet the highest retail price in the EU among the member states covered?

These facts clearly demonstrate that a dysfunctional market has been allowed to develop to the detriment of farmers and consumers and to the obvious advantage of retailers and others in the food sector.

At EU level, there is a growing realisation that the large retailers are actually dominating and determining the market and preventing the operation of the normal market and EU policy on food and agriculture.

The EU has emphasised the vital importance of a properly functioning agriculture and food sector. In the Irish case, this is vital both in terms of competitiveness and the need to bring down costs generally in Ireland.

Pending action at European level -- and in parallel with such action if it comes about -- the Government must take action on the food retailing sector.

There is sufficient primary legislation in the competition arena to bring in the necessary measures to prevent, with the full force of law, the ongoing and substantial abuse of dominant positions by multiple retailers.

There is no more arguing about the extent and nature of this abuse.

The focus is now squarely on what the Government will do -- and when it will do it -- in order to protect the interests of consumers and farmers alike.

Irish Independent

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