Co-ordination is key to food sector - Ibec

GREATER CO-ORDINATION between Government departments is essential to maximise the economic potential of the Irish consumer foods industry, according to a report from Food and Drink Industry Ireland, the consumer foods division of employers’ group Ibec.

The inaugural report into the consumer foods industry, which will be published on an annual basis, found that a number of Government departments and State agencies, often with competing interests, were involved in the regulation of the consumer foods sector.

“This often leads to the creation of regulation by one Government department that negatively affects prospects for growth.”

In particular, it notes the recent decision of the Department of Communications to instruct the Broadcasting Authority of Ireland to prohibit the advertising of certain foods, arguing that the decision was made without sufficient analysis of the impact on the consumer foods industry.

The report also highlights the issue of retail dominance, noting that Ireland has one of the highest levels of retail concentration in the EU with the three largest retailers commanding more than 70 per cent of the market.

This will ultimately have a negative impact on Irish consumers, it argues, as Irish suppliers will be forced out of business as profit margins come under pressure.

The consumer foods industry, ie foods that are processed and prepared for consumer goods rather than raw food products, is worth about €11 billion in turnover, according to the report. Between 265 and 280 consumer foods companies operate in Ireland, while the sector directly employs 12,000 of the 60,000 employed in the overall food industry.

While the sector is a net exporter, exporting €1.5 billion of products annually, primarily to the UK, the report notes that a relatively small number of large companies account for the majority of exports and employment.

“The sector must increase the levels of companies of international scale that can address EU market segments,” it states.

The dependence on the UK market is also a challenge for the sector, it says. With sterling expected to remain weak for the foreseeable future, the body is urging companies to examine market diversification, particularly in the European market.

The report also criticises the delay in the implementation of a code of practice to govern the relationship between retailers and suppliers. “Progress on the creation of a code has been too slow and smaller consumer food companies in particular are being put at risk by the delay,” the report states.

It says the Government should appoint an ombudsman with the power to investigate cases of abuse of buying power.