Certain food retailers have contacted some “small-scale primary producers” to tell them to pass on any reduction in their input costs, according to feedback received by one farm organisation.
The Irish Cattle and Sheep Farmers’ Association (ICSA) believes that the current spotlight on high grocery prices has resulted in “pressure being piled onto local suppliers to reduce their costs, and then pass on those cost savings to the retailers”.
The ICSA beef chair Edmund Graham has warned the government not to be “manipulated” by supermarket groups particularly in relation to the price of important household staples like meat, bread, vegetables, and dairy.
Food retailers
Graham said food retailers are in the spotlight following a meeting of the Retail Forum with the Minister of State at the Department of Enterprise, Trade and Employment yesterday (Wednesday, May 10).
According to Minister Neale Richmond, retailers have given assurances to the government that consumers will benefit from grocery price cuts, but only where inputs cost reductions filter through to products.
Graham said it is crucial that it does not come down to their Irish suppliers to find these input cost reductions for retailers.
“It is important for consumers to understand just what is going on. Most primary producers are operating with tiny margins and have next to no bargaining powers when it comes to negotiating with the big retailers,” he said.
“They are the ones being hammered in the name of bringing down food prices so that retailers can continue to make massive profits behind a veil of almost total secrecy.”
Last week some supermarket groups reduced the price of milk and own brand butter and this week a number also reduced the price of their own brand bread.
Graham said:
“It is laughable to pretend that a 10c cut in a loaf of bread is going to make a substantial difference to household budgets when there are thousands of product lines on supermarket shelves that continue to be sold at extortionate prices.
“On the other hand, input cost inflation is real and the narrow margins on primary products is a reality that is putting extreme pressure on farmers especially in meat, cereals, and vegetables.”
He is concerned that following the meeting of the Retail Forum “hugely profitable retailers have decided to wield their power and heap pressure on primary producers and small-scale suppliers so that they can virtue signal about reducing prices for consumers, but still maintain their own profit levels”.
According to the ICSA it has documented examples of farmers whose costs went up 33% “but who gained about 8% in product price in their dealings with retailers”.
Graham added: “This week’s beef prices are about 8% above this time last year and lamb prices this week are exactly the same as in 2022 and 2021.
“In that context, it is offensive to see government egging on retailers to cut prices for key farm products as if the farmer price is the main driver of inflation.”