Supermarket products “can’t be sold below the cost of production,” according to the President of the Irish Farmers Association.

Tim Cullinan was speaking in anticipation of a price war breaking out among Irish supermarkets after Aldi announced the price of an average trolley would be reduced by one-fifth in their stores.

On Lunchtime Live Mr Cullinan said farmers should be protected against price reductions.

“In the lull period immediately after Christmas, this is another way of attracting consumers in,” he said.

“This is ultimately at the expense of the people, the farmers that are growing the produce - whether that is vegetables, dairy products or meat.

“All of those sectors rely on retailers in Ireland to get their produce to the market.”

Common occurrence

Mr Cullinan believes it's become too common of an occurrence.

“We’re getting this situation year in and year out now,” he said.

“Retailers are using fresh produce in particular as loss leaders within their stores to attract consumers in.

“It’s always the vulnerable sectors that are being challenged from a price point of view.”

IFA president Tim Cullinan at the Irish Farmers Association 65th AGM in Dublin in January 2020. Picture by: Sam Boal/Rollingnews.ie

He’s calling for increased regulation of the sector.

“It’s high time the food regulator gets on the pitch here and investigates it to see what’s happening,” said Mr Cullinan.

“What we need to see here is fair equity throughout the whole supply chain.

“We need to know the margins of every actor in the chain and what they are receiving going forward.

“We cannot have any retailers selling products below the cost of products.”

Good news

Retail management lecturer at TU Dublin, Damien O’Reilly, said a price war means good news for the consumer.

“It’s good news for the consumers because they are getting lower prices,” he said.

“The supermarkets will tell you the margins are quite low and its very intense competition they are having at the moment.

“Aldi has got in there first in the New Year [by lowering prices] because the big spending period is Christmas and then in January people are tightening their belts.”

Mr O’Reilly said the announcement from Aldi on lowering their prices was a clever move.

“This is about getting market share and it’s a strategy to publicise the discounts they are putting in,” he said.

“They wouldn’t put these in before Christmas because people were spending, but they’re putting them in now.

“Aldi would have negotiated with suppliers for these prices over the last few months.”

Taking advantage

Siobhán O’Neill White, from website Mams.ie, said supermarkets have been taking advantage of the consumer.

“I think the supermarkets are an absolute disgrace and are getting away with murder,” she said.

“What I find is now that people are not loyal to any supermarket the way they used to be.

“Maybe there was one you were quite loyal to but they’re not anymore, they’re shopping around trying to get the best price.”

Ms O’Neill White said people now do a weekly shop across multiple stores.

“I’m noticing people are going to one shop for some products, other shops for other products, and are not doing their weekly shop in the one place,” she said.

“They feel like they’re not getting the value they were getting previously and even with money off vouchers it’s not working out.

“If you’re getting money off in a certain shop because the goods are so expensive, you’re not really saving that much money in the end.”

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Main image: Fruit on display in a Tesco supermarket in 2018. Picture by: Doug Houghton / Alamy Stock Photo.