Selling below cost is a piece of cake for many cattle breeders. Cheap beef offerings in supermarkets are driving farm gate prices down, we are told, and a ban on selling below cost would solve all our problems.
In November 2005, then-Minister for Enterprise Micheál Martin repealed the Food Ordinance, which had banned the sale of food below cost since 1987.
“There is no evidence that the order has protected fair competition in the food sector and there is compelling evidence that consumers are paying higher prices as a result of the order,” Martin said at the time.
The order relied on invoices from suppliers and could not be monitored. And it didn’t cover fresh vegetables, fresh fruits, fresh and frozen meat and fish.
Irish grocery shopping has changed significantly since the regulations were drafted in 1987 – as has it in the UK and Europe.
For many, 1980s Ireland was not a prosperous and comfortable place to live. Emigration was common.
Highly processed foods, as well as beauty products, were virtually non-existent in a 1980s shopping cart.
Today, staple foods only make up a small percentage of grocery spending.
When shoppers decide where to make their biggest purchase of the week, a lot depends on their meat shopping preferences.
The Covid lockdown has given smaller shops and butchers a temporary boost, but tighter household budgets this year are leading consumers to look again for ‘value’ in their grocery shopping.
This was recently confirmed to me by a German buyer of meat for European supermarkets.
The relentless competition between retailers is dangerous for farmers. Last week Lidl Belgium reported an operating loss of 47.1 million euros for the year, its worst figures ever and showing how far big retailers are willing to go in their quest for market dominance.
The independent retail trade in Belgium fears a wave of bankruptcies.
For the big supermarkets, some products are crucial to gain a foothold. Beef is one of them.
This doesn’t mean retailers can charge whatever they want for it – on the contrary, they believe they can recoup their losses on other products like cosmetics by discounting beef.
As someone who hasn’t bought hair care products in over 30 years, the fact that supermarkets manage to make big profits elsewhere in their stores, away from the fresh beef department, is no reason for beef farmers to approve a ban on cheap produce demand sale.
Price promotions – where supermarkets bear the cost – increase the volume of beef products sold while ensuring beef is competitive with cheap pork and poultry.
While we would all like to see beef sold on supermarket shelves at sky-high prices, the reality is that supermarkets are just one of many beef outlets alongside fast food restaurants, hotels, pubs and other food service establishments.
If retailers continue to see the value of beef promotions while being willing to break even and it helps shift stock that would otherwise accumulate, it must be seen as a positive.
The alternative is to build up inventories and have consumers buy other types of meat instead.
With 85 per cent of our beef being exported, a ban on selling below cost in Ireland is virtually meaningless for beef farmers. It may make sense for vegetable farmers, but for beef farmers a ban would be counterproductive and expensive.
As Christmas approaches and the factory price of beef is under pressure, more retail price action on beef is needed, not a ban on selling below cost.
Angus Woods is a drywall builder in Co Wicklow
https://www.independent.ie/business/farming/comment/dont-believe-the-hype-below-cost-selling-is-actually-good-for-beef-farmers-42084134.html Don’t believe the hype: Selling below cost is actually good for cattle farmers