Omitting below-cost selling of food by retailers from a list of unfair trading practises (UTPs) would be a grave error, according to the president of the Irish Creamery Milk Suppliers Association (ICMSA). In response to ongoing negotiations as to whether it be included on the list, Pat McCormack said excluding below-cost selling would undermine the whole reform of the supply chain.

In recent times, a number of retailers have been accused of selling liquid milk at prices below the cost of putting the milk on shelf.

Objection

The competition directorate has raised an objection to the Agricultural Committee classification of below-cost selling as a UTP as it may work against legitimate promotional activity for new products.

However, McCormack said that below-cost selling represented a subsidy by the producer to the retailer and that any loss from such promotions in food was only for the farmer involved. He explained that retailers using tactics such as loss-leaders created a win-win situation for them.

He said: “They don’t carry the loss for the below-cost food because they just drop their price back to the food producers and they gain on the increased footfall and higher sales on realistically priced items.”

The companies supplying the corporate retailers in turn drop their prices back to their farmer-suppliers who can’t drop their input costs and effectively end up subsidising the whole exercise.”

Ruinous

McCormack said the idea that below-cost selling would not be included on a list of UTPs was absurd. He added that in many respects the practice was the most ruinous method used by retailers build their power over suppliers and margins.

He concluded by saying it was time the practise was ended and that the Agriculture committee must reject the incoherent arguments against its inclusion.