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Smith speaks on Food Retail Margins at EU Ministers Meeting

Speaking on his return from a meeting of the EU Council of Agriculture Ministers, the Minister for Agriculture, Fisheries and Food, Brendan Smith TD, said today that the issue of retail margins on food products has become a point of heated public debate in recent times, and this had been reflected at the Council meeting.

"Underlying the recent debate is the increasing concentration of retail power in the hands of a few large supermarket chains.  This is an international phenomenon which has fundamentally changed the balance of market negotiating power in the food chain. And this is one factor, although not the only one, behind the declining share of retail prices which is passed back to producers" said Minister Smith.

The Minister said that in recent months price volatility has had a dramatic impact on producer returns.  Consolidation at processor level, as well as appropriate market supports, are necessary to ensure maximum efficiency and to balance the market power of the large retail multiples, and competition policy must be sensitive to this.

Minister Smith said we were all agreed on the paramount importance of the European agri food industry not simply to secure the four million jobs across Europe but also so that the EU can meet the future demand of its population for food, feed and bio-energy.  "While fully recognising that retailers must strike a reasonable balance between granting price reductions to consumers and giving a fair return to suppliers and producers, this should not be done at the expense of a viable European agri-food sector" the Minister said.

Minister Smith said that Commissioner Fischer Boel had indicated that the Commission will undertake a review of anti-competitive practices in the food supply chain, with a particular focus on the dairy and pigmeat sectors. They are also undertaking a wider review of the retail sector, and both reports will be completed by the end of the year.  The Commissioner had also agreed with Minister Smith and other Ministers at the Council that there was a need to improve transparency on prices and costs in the food chain. 

Date Released: 27 May 2009