Noted economist Jim Power – a former chief economist for Bank of Ireland – has said it would be “absolutely disgraceful” if Ireland had to import horticulture products as a result of growers here going out of the business.
Yesterday (Monday, March 21), the Irish Farmers’ Association (IFA) launched a report compiled by Power into the compression of retail prices of Irish horticulture products. The launch took place at Kilbush Nurseries in north Co. Dublin.
The report notes that the number of horticultural growers in Ireland has been steadily decreasing in recent years, which it links to the decreasing retail price.
Speaking to Agriland at the launch, Power explained that he looked at three aspects of the horticulture sector in Ireland: the current status on the sector; the input costs for the sector; and the prices of horticulture products at retail level.
“Margins are being squeezed, the number of participants in the industry are gradually falling off. What we’ve seen over the last 12 months prior to the Ukraine war is that all input costs have been rising dramatically – fertiliser and energy costs, we’ve seen those pressures. And the third pressure in labour,” the economist stated.
In terms of retail prices for products from this sector, Power highlighted that “this is not a new phenomenon”.
“Over a decade there has been consistent price compression in the retail sector and it’s largely been driven by Aldi and Lidl, the two ‘discounters’, who now control roughly 25% of the retail grocery market,” he claimed.
“So the bottom line is that if you have prices at the retail level falling, it means that people further down the supply chain are being squeezed and the primary producer is always the most vulnerable in that situation.
“That’s across agriculture, but it’s particularly acute in horticulture at the moment,” Power added.
If the current situation continues, he argued, producers would continue to be forced out of business and we would become more reliant on importing horticulture products.
“I think for a country like Ireland, that has so many natural advantages in the production of horticulture – and indeed agriculture generally – it would be absolutely disgraceful to see that happening,” he remarked.
“My conclusion is that there is market failure at the moment. The primary producer is not getting adequately rewarded for the effort and cost they put into grow horticulture products, and of course over the last three or four weeks with the Ukraine war situation, all of these pressures have been exacerbated.”
Jim Power argued that intervention is required when market failure occurs, and that reintroducing the ban on below-cost-selling “has to be a key part of the strategy”.
However, he expressed concerns that there would not be the necessary political will to reintroduce this ban, as “introducing legislation that will, in theory, make food more expensive for consumers is going to be very difficult to sell, politically”.
“I do think that a much more rounded, holistic approach is required here, because I think many Irish consumers would recognise food security is really important – that has obviously been highlighted with the Ukraine war situation – so if you want to create food security, you need to make sure that the people who produce the food are compensated adequately,” the economist argued.
Jim Power concluded: “If you don’t, we’re just going to lose it, and I think for a country like Ireland that would be disgraceful.”