FDII warns against punitive demands on suppliers
Ibec's consumer foods division calls for a code of conduct as European Commission reviews sustainability of supply chains across the bloc
11 February 2009 | 0
Food and Drink Industry Ireland (FDII) has said that any moves to reduce prices must not be achieved through the use of increased or unfair demands on food suppliers.
The statement has come following comments by Tanaiste Mary Coughlan on sterling-euro retail price differences.
Head of Consumer Food at FDII, Shane Dempsey said: "In the past, calls for price reductions have resulted in a range of punitive demands on the supplier sector.
"Suppliers are already under enormous pressure due to the drop in the value of sterling, soaring energy costs and the prohibitive costs of regulation; and are finding it impossible to meet these demands.
"The industry is currently under serious pressure from production costs and price pressures, with an estimated 10,000 to 12,000 jobs within the sector currently under threat."
The European Commission is conducting a review of food prices across the bloc and is drawing up a roadmap to ensure the security and sustainability of its food supply chain. Recently, food and beverage sector representative bodies from different EU members met to discuss policy framework for the EU-wide supply chain. Each member state is currently reviewing its own policies to identify any "potentially problematic" areas.
With regard to this, FDII says: "Practices which distort the relationship between suppliers and retailers should be discouraged," including "late payments, unjustified or excessive fees paid by suppliers for services provided by retailers, or tempting consumers with misleading offers."
FDII says it has been made aware of the use of "coercive practices" by certain retailers at the moment. These include threatening suppliers with delisting for failing to meet demands such as "additional contributions" (over €1m in some cases) outside of the original buying agreement, to finance in-store promotions and advertising.
The consumer foods agency says it is calling for the introduction of a code of conduct for retailers, in the interest of the sustainability of the Irish food supply chain, and says that current national codes of conduct need to be reviewed.