State support requested to help food industry mergers

An Enterprise Ireland board member has recommended that the State should support food companies which are merging even in cases where jobs are being lost.

Mr David Dilger, who is chief executive of the food group, Greencore, said that although industrial development had focussed on job creation in the past, the food industry had to develop an infrastructure capable of competing globally which would mean the shedding of jobs.

"That in itself is not a reason for not supporting amalgamation or merger activity which we need to see in order to create the infrastructure which we need. It would be a very good investment," he said.

Mr Dilger, who was speaking at a Food, Drink and Tobacco Federation conference on `The Impact of Globalisation on the Food and Drink Industry' said the achievement of "corporate scale" was a high priority for food companies.

Referring to the opposition of the Competition Authority to the Avonmore Waterford Group's acquisition of Athboy Co-op, he claimed Ireland's competition policy was ambivalent about companies achieving corporate scale.

Competition law needed to be changed "to the extent that it inhibits the creation of dominant positions in an Irish context".

"We will never create a corporate scale which will make a difference to Ireland if we judge the scale by something akin to the Dublin liquid milk market," he said. He refused to comment on whether Greencore and the IAWS group would be possible merger candidates, although it has been mooted as a logical rationalisation.

He said the focus on job creation in the past as the single "and almost sole objective" could not apply in the food industry. "There is every reason to invest in it despite the fact that that growth might be to some extent jobless," he said. Mr Dilger added that negative attitudes had been inculcated into the agriculture sector that "we cannot aspire to compete on a level playing pitch". "Nothing could be further from the truth."

The sector was living in a fur-lined trap dependent on a EU policy "which throws carrots at us in ever decreasing size". "We make no plans to grow our own when they run out," he said.

The State could not continue confusing a social policy with an agricultural policy. There was no other segment of Irish industry where there was a social obligation underlying the industry's purchasing obligations.

"In 1998 you cannot build an international competitive industry at the same time that that industry subsidises inefficient production," he said. The chief executive of Enterprise Ireland, Mr Dan Flinter, said the agency's focus would be on indigenous companies which were growing their sales, while being conscious of the innovation needs of those firms. It would not be financing the rationalisation of the beef sector, he said, although the need for restructuring had been recognised by the Government-commissioned McKinsey Report. He said there was a recognition of the need for rationalisation in the processing sector. "I strongly believe that it is now time that we face that reality," he said.