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IFA President John Bryan has welcomed the move by the Musgrave Group and said it could be the difference between viability and bankruptcy for many suppliers. He said, “Suppliers to Superquinn should have been looked after by the banks and the receiver in the initial deal, and the Government should have insisted on this.”
He said, “The Musgrave initiative reflects genuine concern for indigenous suppliers, and their purchase will keep the Superquinn brand in Irish hands.”

John Bryan called on the receivers to ensure that existing suppliers to Superquinn are supported and that payment for goods delivered is made immediately to assist cashflow, until the Musgrave Group take over and payment for outstanding debts are made.

The IFA President said there has to be a fundamental review of the credit term arrangements between supermarkets and suppliers that reduces the lengthy wait for payment. He said the Government must incorporate strict credit terms into the Code of Practice that reduces the exposure of suppliers.

“IFA has written to the Enterprise Minister Richard Bruton and is insisting on a much shorter payment period in the future. Under the existing conditions, retailers have been hoarding vast amounts of cash, while suppliers have to wait for payment of goods. This allows the supermarkets to earn substantial interest in the bank, but puts pressure on suppliers who have to meet their own bills.”

The IFA President said the Code of Practice must re-balance the relationship. “We have to see greater equity in the food supply chain. The credit terms forced on suppliers is indicative of the dominant position the retailers hold in the food chain. If the Code of Practice is to have any practical benefit, then it must address this issue and IFA is calling for regulations that ensure suppliers are paid within 21 days of delivery.”

Mr Bryan said farmers selling cattle can insist on payment on the day, and milk suppliers receive a cheque from their co-op each month. “Suppliers to supermarkets cannot be forced to accept a longer wait. Cashflow on farms is crucial and retailers cannot continue to force extended payment arrangements on suppliers. In addition, ‘retention of title’ should be automatic until goods delivered are paid for in full by retailers.”

Following the publication of the Travers Report on a draft Code of Practice for the grocery goods sector, IFA President John Bryan said having carried out a detailed assessment of the draft, IFA has grave concerns that it does not include the necessary protection for the primary producer in the food supply chain.

Mr. Bryan said the proposed legislation has more to do with protecting the retailers and their predatory pricing rather than achieving equity and fairness in the food supply chain.

The IFA President called on the Minister for Enterprise, Jobs and Innovation Richard Bruton to ensure that key issues were addressed in the Code of Practice to recognise and protect the interests of the supply base and the primary producer.

In particular, the Code of Practice must ensure:
that unsustainable practices, including below cost selling are outlawed;
contracts between retailers and suppliers do not include provisions to support retailer promotions / discounting;
the principle of fair trade for farmers in the grocery sector by providing a means for the more equitable share-out of the consumer price across the food chain;
retailers are obliged to report details of their profitability and turnover in this country;
penalties are put in place to guarantee that retailers comply with the Code;
a limit is set on the use of own brands

Along with a Code of Practice, the Government must legislate for an Independent Ombudsman office, which would have legal powers to demand information from retailers as part of their investigations and provide anonymity and confidentiality to suppliers who make complaints to initiate investigations and have the powers to enforce penalties for non-compliance.

IFA will be making a detailed submission to Minister Bruton on the Code of Practice and the final legislation must ensure greater equity and transparency in the share our of the consumer price between retailers, their food suppliers and especially primary producers.

IFA President John Bryan today welcomed the publication of the Travers Report setting out details of the draft statutory code of practice for the grocery goods sector.

He said “Minister for Jobs, Enterprise + Innovation Richard Bruton TD must ensure that the code also prioritises more equity in the food supply chain for primary producers as well as consumers. In particular retailers must be held responsible for the impact their pricing policies have on the viability of primary producers.”

“Retailer dominance and their predatory business practices has resulted in the loss of jobs and bankrupted Irish businesses by driving down prices to farmers and small suppliers to unviable levels as they protect their own excessive margins. The statutory code must address this fundamental flaw and ensure that all players in the food supply chain receive “Fair Play”.

Mr Bryan also said that the statutory code must include penalties to ensure that the retailers comply with the code.

IFA President John Bryan will this evening (Tues) meet Enterprise Minister Richard Bruton to discuss plans for delivering a fair margin for primary producers and curbing the power of the retail multiples. He said, “The Minister must give a firm commitment that legislation contained in the Programme for Government will be prioritised and implemented without further delay. It was very disappointing to see the current legislative list did not contain the Fair Trade Bill that Fine Gael promoted so vigorously in the run-up to the recent General Election.”

John Bryan said, “IFA held a number of meetings with the facilitator John Travers in 2010 and we were assured that progress was being made on the introduction of a Code of Practice and the appointment of an Ombudsman. The Minister has now received a report from John Travers and we expect him to act quickly.”

The IFA President said he would be pressing Minister Bruton to prioritise the legislation that would fix the food supply chain. “All farmers want is to be able to cover their costs and make a living. The dominance of the supermarkets is forcing farmers to sell below the cost of production, which is not sustainable and is costing jobs. Without effective legislation and strong enforcement, the inequity will remain.”

Mr Bryan said there was increasing focus at EU Commission level and in other Member States on retail regulation. “There is now a growing recognition among lawmakers in Europe of the need for robust legislation that will ensure fair play for producers.”  For example, the UK Government has introduced a Groceries Code Adjudicator Bill. The Bill seeks to establish an adjudicator to monitor and enforce the Groceries Supply Code of Practice who will be able to:

act as arbitrator in disputes between retailers and their direct suppliers;
start investigations about potential breaches of the Code based on complaints from suppliers and/or information in the public domain.
Concluding, John Bryan said, “All the political parties here accept the imperative of a Code of Practice that will curb retailer dominance, and have made commitments to deliver this. The Government must press ahead with their proposals immediately.”

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