Wednesday 25 April 2018

Dan White: Burgergate is good news for food industry

How the horse-meat scandal could force retail giants to source high-quality food ingredients produced here

WITH Patrick Coveney's Greencore the latest firm to be drawn into the horse-meat scandal, it could yet turn out to be good news for this country.

Highlighting the murkier aspects of the European food industry will force processors, manufacturers and retailers to source more higher-quality, more expensive ingredients from reputable suppliers. When this happens Ireland will be one of the beneficiaries.

Who would have thought that when "Burgergate" first erupted a month ago it would spread so widely? What first appeared to be no more than isolated, local shenanigans quickly morphed into a continent-wide scandal with investigations in eight European countries.

It is now clear that there is a pan-European black market supplying the lower end of the food market with cheap ingredients.

If burgers and lasagnes could consist of up to 100 per cent horse meat then one shudders to think what cheap sausages, pies and other foods might contain.

When the Food Safety Authority of Ireland (FSAI) first announced the presence of horse meat in some burgers on January 15, it seemed as if the reputation of the Irish food industry, our biggest indigenous export sector with overseas sales of more than €9bn in 2012, would take another battering.

These fears were borne out in the early days when media attention focused on the alleged shortcomings of the Irish food industry.

This quickly changed when, one after another, a raft of other European countries was drawn into the affair. As of this weekend, the UK, Germany, France, Luxembourg, Sweden, Poland and Romania have also been implicated in the scandal.

It's a systemic crisis. Under relentless price pressure from their retailer and food service customers, suppliers were forced to cut corners. This in turn created an opportunity for the unscrupulous traders and middlemen in the industry. So long as the price was right no one was prepared to ask any embarrassing questions.

While it is the suppliers who have been getting it in the neck up to now, expect this to change. Before the scandal broke certain UK food retailers were selling eight frozen "value" burgers for as little as £1 (€1.16).

It's remarkable that food multiples' buyers didn't ask: how on earth could suppliers be expected to meet the supermarkets' product specifications for the prices which they were prepared to pay? Was it a case of not knowing or of not wanting to know?

It is clear that things have gone very wrong in the European food chain. Only full disclosure of what has happened and the punishment of those who were responsible will restore public confidence.

That's the bad news. The good news is that the horse-meat scandal has the potential to be the catalyst for major changes in the way the European food industry goes about its business. At the very least the multiples will in future have to ask far more questions of their suppliers and carry out their own DNA testing.

Not alone will this make it much more difficult for rogue operators to slip horse meat into the food chain, it will also force the multiples to pay more for decent ingredients.

Multiples are discovering the hard way that, when the reputational damage caused by food scandals is added, apparently "cheap" food can be expensive.

We should think of "Burgergate" as an opportunity. Halting the supermarkets' relentless race to the bottom will increase the demand for high-quality Irish food ingredients and the price which the retailers are prepared to pay for them.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business