May 29, 2009

After slapping hefty anti-competitive fines on computer technology giants Microsoft and Intel, the European Commission has now turned its attention to the food supply chain with a focus on the dairy and pork sectors.

The Commission is undertaking a wider review of the retail sector, and that the reports will be completed by year-end, said Irish Agriculture and Food Minister Brendan Smith.

Smith said EU Agriculture Commission Mariann Fischer Boel agreed with him and other ministers that transparency on prices and costs in the food chain must improve.

The issue of retail margins on food products has become a point of heated debate in recent times, and underlying the debate is the rising concentration of retail power in the hands of a few large supermarket chains, Smith said.

That is noted as an international phenomenon that has changed the balance of market negotiating power in the food chain.

But that is only one of the other factors behind the declining share of retail prices which is passed back to producers, he said.

Price volatility in recent months also had a huge impact on producer returns, Smith said. Consolidation at processor level, as well as appropriate market supports, is necessary to ensure maximum efficiency and to balance the power of multiples. Competition policy should be sensitive to this.

While fully recognising that retailers must strike a reasonable balance between granting price reductions to consumers and giving a fair return to suppliers and producers, this should not be done at the expense of a viable European agri-food sector, according to Smith.