ICMSA ques­tion idea that re­tail­ers make no profit on beef – “If they don’t, it’s be­cause they choose not to!”

Wicklow People (West Edition) - - PICTURES -

THE Chair­per­son of ICMSA’s Live­stock Com­mit­tee has said that farm­ers would be “very scep­ti­cal in­deed” of Pro­fes­sor Damien McLough­lin’s be­lief that re­tail­ers and pro­ces­sors were op­er­at­ing on wafer-thin mar­gins or no mar­gins at all where beef is be­ing used to gen­er­ate re­tail foot­fall. Des Mor­ri­son said that Pro­fes­sor McLough­lin’s opin­ion begged a fun­da­men­tal ques­tion: “If the pro­ces­sor-fac­to­ries aren’t mak­ing a profit and the re­tail­ers aren’t mak­ing a profit, then could the pro­fes­sor please tell us who is tak­ing the dif­fer­ence be­tween the roughly €3.50 per kg the farmer is get­ting and the ap­prox­i­mately €9 per kg the con­sumer is pay­ing? I’m sure ev­ery farmer in Ire­land would be in­ter­ested in the answer”, said Mr Mor­ri­son.

“I’m not doubt­ing Pro­fes­sor McLough­lin’s ex­per­tise or mo­tives, but if you put for­ward a state­ment like that then we think it’s in­cum­bent upon you to sup­ply a break­down that sup­ports your ar­gu­ment. Even as­sum­ing that his anal­y­sis is cor­rect – which, again, we doubt – then we’re still left with an ex­pla­na­tion that works back­wards from the point where re­tail­ers use beef as a way of in­creas­ing foot­fall - a way of get­ting shop­pers into their premises and then mak­ing-up their al­leged lack of profit on beef through high mar­gins on other prod­ucts”, said Mr Mor­ri­son.

“I’ve no doubt that may be true; it may even be com­mon. But the point surely is that they re­tail­ers choose to use beef as so-called ‘loss leader’; in mak­ing this choice and sell­ing the beef at ar­ti­fi­cially low prices what they are ac­tu­ally do­ing is us­ing the farm­ers’ mar­gins to sub­sidise their sales tac­tic. There’s no sac­ri­fice on the part of the re­tail­ers; they tell the fac­to­ries what price they’re go­ing to pay, the fac­to­ries cut their price to the farm­ers to make their own mar­gins work at that ar­ti­fi­cially low price, and so it’s the farmer who ends up sub­si­dis­ing the re­tail­ers’ sales tac­tic of us­ing low beef prices to gen­er­ate foot­fall”, he con­tin­ued.

The ICMSA Live­stock Com­mit­tee Chair­per­son said that farm­ers would ab­so­lutely dis­agree with the idea that re­tail­ers had no mar­gin on beef, but he pointed that even if that were true, it was be­cause the re­tail­ers were mak­ing a strate­gic busi­ness de­ci­sion to do so.

“If that is the case then the re­tail­ers are mak­ing a con­scious de­ci­sion to use beef as a loss-leader - what farm­ers ob­ject to is the fact that the cost of that re­tail­ers’ de­ci­sion is passed back di­rectly to, and borne by, the farmer pri­mary-pro­ducer”, said Mr Mor­ri­son.

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