A new horticulture report launched by the Irish Farmers’ Association (IFA) this week (March 2022), has detailed how trends in Ireland’s food retail market and changes in consumer behaviour are threatening the viability of the Irish horticulture sector.
The report which was prepared by economist Jim Power, outlines how a shift in the proportion of household income spent on food over the past 25 years, as well as significant downward pressure on retail prices is putting intense pressure on the primary producers in the sector.
According to the report, the consumer spent 9.5% of their household expenditure on food in 1995. However, by 2019, this figure had declined to 7.8%.
Alongside this, the price of food has been steadily declining for a number of years also. The report outlines that between January 2010 and December 2021, the average price of food in Ireland had fallen by 9%, despite an increase of 13% in overall consumer prices.
This downward pressure on food prices is due to a combination of factors, as the report outlines, including intense competition driven by imports as well as a growing market share for discount supermarkets.
These factors combined create an intensely competitive market and a demand for cheaper food from the consumer.
A significant source of pressure for producers in the Irish horticulture industry is the competition they face from imports.
The report estimates that Irish consumers spent approximately €1.59 billion on retail fresh produce in 2020. In the same year, Ireland imported fruit and vegetables to the value of €1.35 billion.
A large proportion of these imports were from neighbouring European countries. 29.4% came from Great Britain, 12.2% came from the Netherlands, 11.9% came from Germany and 4.5% come from Northern Ireland.
The report analysed price compression in the horticulture sector from a long-term perspective to highlight the growing pressure that domestic growers are facing.
The table shows that the most significant decrease in price between January 2010 and December 2021 was in the frozen vegetables category. It decreased by almost 20%.
Meanwhile the price of potatoes fell by 14.6% while the average retail price of fruit declined by 3.5%.