ESRI and Competition Authority responsible for banking regulation..

nesf

This fascinating story of two organisations, originally believed to be completely not responsible for banking regulation, turning out to be key figures in the banking regulation fiasco of recent years was revealed by new IFA president John Bryan on Frontline 01/02/10. When pressed for details Mr Bryan muttered something about retailers ripping off farmers and consumers and went back to hammering the pulpit and playing to the farming crowd in the audience.


My mind boggles that people like this man are actually helping to shape economic policy in the country. The reference above is to the ESRI and the Competition Authority objecting strenuously to the idea of a separate Ombudsman being set up to monitor farmer-retailer relations after such a plan was mooted by Mary Coughlan after meeting IFA members. When this was pointed out to John Bryan he dismissed both organisations as having being involved in the regulation of the banks. Details of said plan available here on the IFA website: http://www.ifa.ie/IFAInformation/tabid/586/ctl/Detail/mid/2202/xmid/3348/xmfid/23/Default.aspx*


*Among the measures involved in their proposal the IFA want to make below cost selling illegal. Did the country regress back to 1950's economic policy while I was sleeping or something?

nesf

Actually this kind of blatant special interest strong arming really incenses me. Making below cost selling such as 3 for 2 offers illegal will just push up prices for consumers, in the middle of a God damn recession. If there was price fixing going on between the large multiples then there already is a regulatory body to investigate this in the Competition Authority! We don't need to waste more taxpayer money on a new Ombudsman office to scrutinise the retail sector!

Sleepy

How many of the people being trusted to shape our economy would you actually trust to accurately count the contents of your child's piggybank though nesf?

There's an incredible shortage of what would pass for common sense to those educated in economics to Leaving Cert level amongst our politicians and lobby group spokesmen.

The_Honeybadger

nesf wrote: »

Actually this kind of blatant special interest strong arming really incenses me. Making below cost selling such as 3 for 2 offers illegal will just push up prices for consumers, in the middle of a God damn recession. If there was price fixing going on between the large multiples then there already is a regulatory body to investigate this in the Competition Authority! We don't need to waste more taxpayer money on a new Ombudsman office to scrutinise the retail sector!

I think it is utter nonsense to say that below cost selling and 3 for 2's or BOGOF's should be illegal, however I agree farmers need a bit more protection. I am from a very rural area (i am not a farmer) and believe me if they continue to be paid what they are currently being paid for their produce, we won't have much of an agri-business sector left in a few years. Their margins have been eroded continually over the past number of years while the producers and retailers have creamed it, all they are asking for is some fair play and everybody in the supply chain to get a fair cut. More and more will leave the sector and possibly emigrate or go on the dole, do we want to be dependent on imports for our food from now on as well as most other things? I would like to see them paid a fair price for what they work hard to produce, this does not have to mean that the price in the supermarket goes up, it can come from the high margins further up the supply chain.

ei.sdraob

mickeyk wrote: »

. I am from a very rural area (i am not a farmer) and believe me if they continue to be paid what they are currently being paid for their produce, we won't have much of an agri-business sector left in a few years. Their margins have been eroded continually over the past number of years while the producers and retailers have creamed it, all they are asking for is some fair play and everybody in the supply chain to get a fair cut. More and more will leave the sector and possibly emigrate or go on the dole, do we want to be dependent on imports for our food from now on as well as most other things? I would like to see them paid a fair price for what they work hard to produce, this does not have to mean that the price in the supermarket goes up, it can come from the high margins further up the supply chain.

there is one question that wasnt asked last night unfortunately on Frontline that i will now ask

why cant the farmers themselves setup a chain of shops (under a co-op scheme?) and sell direct to the customers in Ireland their produce? at whatever prices they think are "fair"

why not??

how come no one in the frontline room asked the most obvious of questions?

cavedave

if they continue to be paid what they are currently being paid for their produce, we won't have much of an agri-business sector left in a few year

What have you done to keep the price of barrels and linen up? Coopering and cloth making used to be big industries here and because these were not protected with gauranteed pricing and restrains on foreign imports they disappeared.

Their margins have been eroded continually over the past number of years while the producers and retailers have creamed it, all they are asking for is some fair play and everybody in the supply chain to get a fair cut

Then why not sell to someone else?

I would like to see them paid a fair price for what they work hard to produce,

How do you define a fair price? What fair price should coopers get for the hard skilled work of making wooden barrels?

Macha

mickeyk wrote: »

I think it is utter nonsense to say that below cost selling and 3 for 2's or BOGOF's should be illegal, however I agree farmers need a bit more protection. I am from a very rural area (i am not a farmer) and believe me if they continue to be paid what they are currently being paid for their produce, we won't have much of an agri-business sector left in a few years.

Absolutely. Just a few days ago the UK government announced the creation of a supermarkets ombudsman to resolve disputes between suppliers and supermarkets. Basically it's an attempt to limit the ridiculous amount of power supermarkets wield over suppliers. Given that we have even more of a monopoly here than in the UK (although in both countries approx. 80% of food is sold in supermarkets) Irish farmers would probably benefit from a similar organisation here.

http://news.bbc.co.uk/2/hi/business/8457450.stm

ei.sdraob

taconnol wrote: »

Absolutely. Just a few days ago the UK government announced the creation of a supermarkets ombudsman to resolve disputes between suppliers and supermarkets. Basically it's an attempt to limit the ridiculous amount of power supermarkets wield over suppliers. Given that we have even more of a monopoly here than in the UK (although in both countries approx. 80% of food is sold in supermarkets) Irish farmers would probably benefit from a similar organisation here.

http://news.bbc.co.uk/2/hi/business/8457450.stm

once again that goes back to my earlier question, if the supermarkets/distributors are so "evil" then

"why cant the farmers themselves setup a chain of shops (under a co-op scheme?) and sell direct to the customers in Ireland their produce? at whatever price they consider fair"

the above would also create jobs

Macha

ei.sdraob wrote: »

once again that goes back to my earlier question, if the supermarkets/distributors are so "evil" then

"why cant the farmers themselves setup a chain of shops (under a co-op scheme?) and sell direct to the customers in Ireland their produce? at whatever price they consider fair"

the above would also create jobs

They have - they're called 'farmers markets'

What people don't realise is that we end up paying for the food in the end but just indirectly through subsidies to farmers who can't live on the ridiculously low prices they're given by supermarkets.

P. Breathnach

ei.sdraob wrote: »

once again that goes back to my earlier question, if the supermarkets/distributors are so "evil" then

"why cant the farmers themselves setup a chain of shops (under a co-op scheme?) and sell direct to the customers in Ireland their produce? at whatever price they consider fair"

That's a daft proposition. It's akin to saying that if people think that GP fees are too high, they should self-medicate.

I agree with those who believe that there is a power imbalance between the big retailers and the producers, and that the big retailers exploit their power ruthlessly.

You can be sure that if Irish farmers saw different mechanisms to bring their produce to market, they would use them (farmers' markets are an example of such a response, albeit on a small scale). But you have to take note of the shopping habits of Irish consumers, and they tend to favour one-stop shopping.

The_Honeybadger

ei.sdraob wrote: »

there is one question that wasnt asked last night unfortunately on Frontline that i will now ask

why cant the farmers themselves setup a chain of shops (under a co-op scheme?) and sell direct to the customers in Ireland their produce? at whatever prices they think are "fair"

why not??

how come no one in the frontline room asked the most obvious of questions?

I will give you an example:

A good friend of mine is a dairy farmer, produces 200,000 gallons of milk per year, where could he possibly sell that much if not to the likes of Kerry or Lakelands. Small scale producers can sell at farmers markets and the like, larger scale can't. He is being paid slightly less than what it costs to produce it at the moment, prices are cyclical and he knows this could turn around in the future so he is holding on, but won't be able to indefinately.
Of course we all want food for half nothing, but unfortunately producing food is expensive, everybody in the supply chain needs their cut or the system will fall apart eventually. At the moment the farmer (who does most of the work) gets very little and the middlemen (producers) and retailers are getting alot.

By the way we also have 250,000 employed in the agrifood sector, this is a sector where we actually produce something, and has been the basis for some of our most successful indigenous companies, IMO it is very important that this problem is addressed as certain players in the system are abusing their powers, and we need to keep every job we can at the moment.

ei.sdraob

taconnol wrote: »

They have - they're called 'farmers markets'

What people don't realise is that we end up paying for the food in the end but just indirectly through subsidies to farmers who can't live on the ridiculously low prices they're given by supermarkets.

and how many of these markets are open 7 days a week?

more importantly how much is the milk sold in these markets for?

P. Breathnach wrote: »

That's a daft proposition. It's akin to saying that if people think that GP fees are too high, they should self-medicate.

I agree with those who believe that there is a power imbalance between the big retailers and the producers, and that the big retailers exploit their power ruthlessly.

You can be sure that if Irish farmers saw different mechanisms to bring their produce to market, they would use them (farmers' markets are an example of such a response, albeit on a small scale). But you have to take note of the shopping habits of Irish consumers, and they tend to favour one-stop shopping.

its not a daft proposition at all

if anything its quite an interesting business idea (only if people in this country started having more of these)

the farmers are blaming the supermarkets for ripping them off, well theres nothing stopping the farmers getting together and opening a chain store business to which they can supply their produce themselves directly, a place where a customer can pop-in and buy fresh local milk, meats and other produce

assuming the farmers claim that the supermarkets are ripping them off, then they can make an absolute killing by undercutting these supermarkets and selling direct to the public via this proposed chain of stores

theres nothing stopping the farmers getting together setting up a co-op and opening a chain of stores to sell their produce only (or mainly their produce)

co-ops have very successfully been created to help the farmers before in this country, i dont see why the idea cant be taken to another level

unless of course we are not being told the full story

The_Honeybadger

cavedave wrote: »

What have you done to keep the price of barrels and linen up? Coopering and cloth making used to be big industries here and because these were not protected with gauranteed pricing and restrains on foreign imports they disappeared.


Then why not sell to someone else?


How do you define a fair price? What fair price should coopers get for the hard skilled work of making wooden barrels?

This industry would have lost out to lower cost countries who charge 1 dollar an hour for labour anyway, no way we were ever going to compete with that. By the way we export huge amounts of milk powder and other food ingredients products to these countries.

Who else do you propose they sell to? It is a monopoly.

I define a fair price as what it costs to produce the product plus a margin for the farmer. It is not sustainable to have somebody producing 100,000 gallons of milk per year for example, and not being able to make a living out of it. Smaller farmers will always have to supplement their income with off-farm activities.

ei.sdraob

mickeyk wrote: »

I will give you an example:

A good friend of mine is a dairy farmer, produces 200,000 gallons of milk per year, where could he possibly sell that much if not to the likes of Kerry or Lakelands. Small scale producers can sell at farmers markets and the like, larger scale can't. He is being paid slightly less than what it costs to produce it at the moment, prices are cyclical and he knows this could turn around in the future so he is holding on, but won't be able to indefinately.
Of course we all want food for half nothing, but unfortunately producing food is expensive, everybody in the supply chain needs their cut or the system will fall apart eventually. At the moment the farmer (who does most of the work) gets very little and the middlemen (producers) and retailers are getting alot.

By the way we also have 250,000 employed in the agrifood sector, this is a sector where we actually produce something, and has been the basis for some of our most successful indigenous companies, IMO it is very important that this problem is addressed as certain players in the system are abusing their powers, and we need to keep every job we can at the moment.

please refer to my co-op idea above

if the farmers think that they are being ripped off by middle men then theres is nothing stopping them in setting up a Farmer's Co-op of Ireland and cornering the market here and expanding abroad

for that matter the bigger this co-op gets the more of economies of scales kick in
wasnt the whole idea behind DairyGold was to help the farmers, and has it not done just that?


the farmers in this country are missing a huge opportunity by becoming shareholders in a huge co-op (near monopoly ) they can dictate prices to supermarkets etc, not the other way around, mind you im sure the consumer would get ripped of in either scenario

cavedave

mickeyk

Who else do you propose they sell to? It is a monopoly.

To a co-op the way British farmers can.

I define a fair price as what it costs to produce the product plus a margin for the farmer. It is not sustainable to have somebody producing 100,000 gallons of milk per year for example, and not being able to make a living out of it. Smaller farmers will always have to supplement their income with off-farm activities.

It may not be sustainable. The way it was not sustanable to have a skilled harworking cooper producing barrels no one would pay him a living wage for. So it did not keep happening and he went and got another job. Why should farming be a gauranteed income job unlike all other ones?

The_Honeybadger

ei.sdraob wrote: »

please refer to my co-op idea above

if the farmers think that they are being ripped off by middle men then theres is nothing stopping them in setting up a Farmer's Co-op of Ireland and cornering the market here and expanding abroad

for that matter the bigger this co-op gets the more of economies of scales kick in
wasnt the whole idea behind DairyGold was to help the farmers, and has it not done just that?


the farmers in this country are missing a huge opportunity by becoming shareholders in a huge co-op (near monopoly ) they can dictate prices to supermarkets etc, not the other way around, mind you im sure the consumer would get ripped of in either scenario

You may be onto something, however have you any idea what the capital costs would be to start up something like that. Who would pay for it? It really would be much easier to correct the current system. There is not a huge amount wrong with it apart from supermarkets and producers squeezing the farmers. It is also a bit fragmented in terms of production, a more centralised system would allow for lower production costs which could be passed onto the farmer. The established players would undercut them if they tried to do what you propose and put them out of business, which they could well afford to do.

P. Breathnach

ei.sdraob wrote: »

... the farmers in this country are missing a huge opportunity by becoming shareholders in a huge co-op (near monopoly ) they can dictate prices to supermarkets etc, not the other way around, mind you im sure the consumer would get ripped of in either scenario

I'm beginning to suspect that you boldface the worst ideas you have.

Do you know why the IFA are unhappy with the Competition Authority?

The_Honeybadger

cavedave wrote: »

To a co-op the way British farmers can.

It may not be sustainable. The way it was not sustanable to have a skilled harworking cooper producing barrels no one would pay him a living wage for. So it did not keep happening and he went and got another job. Why should farming be a gauranteed income job unlike all other ones?

We have co-ops here too, its just that our ones screw the farmers.

I have already outlined that these things can be produced in other countries at a fraction of the cost, why this is is a matter for another thread. There is a market for our food products if we can get the balance right and everybody is paid a fair cut. Look at Fonterra in NZ, we could be doing something similar if the industry only got their act together.

Sleepy

mickeyk wrote: »

We have co-ops here too, its just that our ones screw the farmers.

Honest question: how does that work? Are the farmers not the main members of the co-op?

ei.sdraob

P. Breathnach wrote: »

I'm beginning to suspect that you boldface the worst ideas you have.

Do you know why the IFA are unhappy with the Competition Authority?

if you cant beat them join them

this is a great business idea, it worked before for other agricultural co-ops in this country

assuming that the farmers are correct and the supermarkets are ripping them off with large markups then there must be alot of money to be made

the farmers complain that the supply chain is ripping them of, then theres nothing stopping them becoming THE supply chain themselves

look at Dell their whole business involves cutting out the middlemen (Computer shops) and selling direct to the customers


any profits from this "enterprise" can be redistributed back to the shareholders (the farmers themselves) hence its in their interest for the co-op to work

cavedave

New Zealand is an interesting example. since they got rid of subsidies and now sell produce at the market rate according to here and here.

Many irish farmers produce something people value (and consumers prove it with their pockets). Rather than getting ripped off for milk they produce cheese they can sell for much better returns. Rather than go to the one company that buys apples for cider they make there own (David Lleyelan does this in Lusk). Rather than let Diageo pay them too little for Barley they go to white gyspy or one of the Irish micro breweries to get a price they think is acceptable.

The concept of a gaurantteed job for farmers with some sort of Marxist gauranteed price and labour theory of value is not convincing. Good food people want and will spend money on will earn a living

The_Honeybadger

Sleepy wrote: »

Honest question: how does that work? Are the farmers not the main members of the co-op?

Our biggest co-ops have been floated and are now PLC's (Kerry for example) so do what they like. Smaller co-ops buy the milk from farmers and then must sell it on at a profit, in order to please their customers they must do this at the lowest price possible, therefore they do it at the same price as the PLC's (give or take a 1-2 cent), it is responding to what their customers want, so it is not the co-op as such screwing the farmers (I was about to edit my post). The farmer on the ground really has very little say in practice.

ei.sdraob

mickeyk wrote: »

You may be onto something.

theres a problem and there is a solution

thats how businesses start up, the spot an opportunity and go for it

i see this whole mess as a giant missed opportunity by the farmers to help themselves via a co-op like scheme

mickeyk wrote: »

however have you any idea what the capital costs would be to start up something like that. .

same way any business gets initial investment, create a good business plan and pitch it to the banks or venture capitalists

how did any of the Irish CO-ops came about? follow their lead

mickeyk wrote: »

Who would pay for it?

the farmers can be the main "shareholders" in this enterprise

mickeyk wrote: »

It really would be much easier to correct the current system. .

by forcing price controls onto the retailers? what happens if a retailer then says "**** it" and decided not to sell milk? will yeee put a gun to his/her head then too
meddling in markets never ends up helping the consumer

as i said if you cant beat them, join them

mickeyk wrote: »

There is not a huge amount wrong with it apart from supermarkets and producers squeezing the farmers. .

then band together in a co-op and squeze the supermarkets back!

aint that how Trade Unions operate? the workers unionize and hit the employers with big sticks

mickeyk wrote: »

It is also a bit fragmented in terms of production, a more centralised system would allow for lower production costs which could be passed onto the farmer. The established players would undercut them if they tried to do what you propose and put them out of business, which they could well afford to do.

what im proposing is a centralized system, a co-op

if you (the farmer) control a product how will you be undercut? unless your competitor can create the same product for cheaper, and guess what that helps the consumers

The_Honeybadger

cavedave wrote: »

New Zealand is an interesting example. since they got rid of subsidies and now sell produce at the market rate according to here and here.

Many irish farmers produce something people value (and prove it with their pockets). Rather than getting ripped off for milk they produce cheese they can sell for much better returns. Rather than go to the one company that buys apples for cider they make there own (David Lleyelan does this in Lusk). Rather than let Diageo pay them too little for Barley they go to white gyspy or one of the Irish micro breweries to get a price they think is acceptable.

The concept of a gaurantteed job for farmers with some sort of Marxist gauranteed price and labour theory of value is not convincing. Good food people want and will spend money on will earn a living

Exactly, NZ are incredibly efficient in terms of production and marketing and we could replicate that here with a bit of effort from the industry.
Who is saying to guarantee prices, I said I would like to see them paid afair price, which reflects what the product is worth, that means the retailer and producer take a little less of a cut.

Macha

ei.sdraob wrote: »

and how many of these markets are open 7 days a week? more importantly how much is the milk sold in these markets for?

None that I know of and I don't know how much milk is sold but probably not a lot.

ei.sdraob wrote: »

assuming the farmers claim that the supermarkets are ripping them off, then they can make an absolute killing by undercutting these supermarkets and selling direct to the public via this proposed chain of stores

The thing is, how exactly can farmers offer lower prices than supermarkets if supermarkets are already forcing them to sell their produce for less than cost? Farmers markets are more expensive because they don't benefit from economies of scale and the customer is paying for the cost of production plus profit for the farmer.

So how could a farmer-led co-op undercut a supermarket?

Interesting idea though.

The_Honeybadger

ei.sdraob wrote: »

theres a problem and there is a solution

thats how businesses start up, the spot an opportunity and go for it

i see this whole mess as a giant missed opportunity by the farmers to help themselves via a co-op like scheme





same way any business gets initial investment, create a good business plan and pitch it to the banks or venture capitalists

how did any of the Irish CO-ops came about? follow their lead



the farmers can be the main "shareholders" in this enterprise




by forcing price controls onto the retailers? what happens if a retailer then says "**** it" and decided not to sell milk? will yeee put a gun to his/her head then too
meddling in markets never ends up helping the consumer

as i said if you cant beat them, join them




then band together in a co-op and squeze the supermarkets back!

aint that how Trade Unions operate? the workers unionize and hit the employers with big sticks




what im proposing is a centralized system, a co-op

if you (the farmer) control a product how will you be undercut? unless your competitor can create the same product for cheaper, and guess what that helps the consumers

What you are suggesting is to build an entirely new supply chain structure when we already have one that just needs some tweaking. Sorry but I am not convinced.

ei.sdraob

mickeyk wrote: »

Our biggest co-ops have been floated and are now PLC's (Kerry for example) so do what they like. Smaller co-ops buy the milk from farmers and then must sell it on at a profit, in order to please their customers they must do this at the lowest price possible, therefore they do it at the same price as the PLC's (give or take a 1-2 cent), it is responding to what their customers want, so it is not the co-op as such screwing the farmers (I was about to edit my post). The farmer on the ground really has very little say in practice.

you have a problem understanding how a capitalist system works

its not about maximizing "fairness" but about maximizing profits

what i proposed earlier is a business that can kill 2 birds in one stone, by cutting out the middlemen it can maximize profits for the shareholders (the farmers) and hence make it more "fair" for them

that a similar concept to how green business operate they maximise profits and in the processes help the environment (lets say by putting up windmills)

The_Honeybadger

ei.sdraob wrote: »

you have a problem understanding how a capitalist system works

its not about maximizing "fairness" but about maximizing profits

what i proposed earlier is a business that can kill 2 birds in one stone, by cutting out the middlemen it can maximize profits for the shareholders (the farmers) and hence make it more "fair" for them

that a similar concept to how green business operate they maximise profits and in the processes help the environment (lets say by putting up windmills)

Can capitalism work when an essential part of the businesss is getting nothing out of their effort?

Sleepy

mickeyk wrote: »

Our biggest co-ops have been floated and are now PLC's (Kerry for example) so do what they like. Smaller co-ops buy the milk from farmers and then must sell it on at a profit, in order to please their customers they must do this at the lowest price possible, therefore they do it at the same price as the PLC's (give or take a 1-2 cent), it is responding to what their customers want, so it is not the co-op as such screwing the farmers (I was about to edit my post). The farmer on the ground really has very little say in practice.

Which begs a coupld of questions:

Who benefitted from the floatation of the biggest co-ops? I'm assuming it's members?

If the farmers are so concerned, why aren't they selling their milk to the co-ops that already exist or forming new ones if they don't have a local. The PLC's would be in *serious* difficulty if they can't get their raw materials so I'm sure they'd eventually capitulate to a price rise or the new and existing co-ops would drive them out of the market.

There's no need for intervention here from what I can see. The market can correct itself if the farmers just start playing it.

The_Honeybadger

Sleepy wrote: »

Which begs a coupld of questions:

Who benefitted from the floatation of the biggest co-ops? I'm assuming it's members?

If the farmers are so concerned, why aren't they selling their milk to the co-ops that already exist or forming new ones if they don't have a local. The PLC's would be in *serious* difficulty if they can't get their raw materials so I'm sure they'd eventually capitulate to a price rise or the new and existing co-ops would drive them out of the market.

There's no need for intervention here from what I can see. The market can correct itself if the farmers just start playing it.

Agree with much of what you say. However consider my friend who I mentioned earlier, if he witholds his milk from the PLC what is he supposed to do with it? He can't just stop milking the cows. He can't dump it by law, and he needs the money anyway to pay his overheads, catch 22. I agree that the problem can be sorted too but all parties need to agree on a sustainable solution.

Edit: And yes the farmers benefitted from the sale of the Co-Ops. Many still have the shares which are worth a considerable amount in some cases.

ei.sdraob

taconnol wrote: »

None that I know of and I don't know how much milk is sold but probably not a lot.
.

do they sell the milk at 40 cent a litre? we heard it costs 30 to produce last night

if they are selling the milk at same rate as supermarkets, then the obvious question is why?

taconnol wrote: »

The thing is, how exactly can farmers offer lower prices than supermarkets if supermarkets are already forcing them to sell their produce for less than cost?

are the supermarkets holding a gun to farmers heads,
once any contracts run out whats stopping a farmer from selling 70% of milk to the before mentioned Fairness for Farmers (FF) CO-op/Plc/Ltd and 30% to supermarkets?

taconnol wrote: »

Farmers markets are more expensive because they don't benefit from economies of scale
.

then band together and create the economies of scale not like it hasnt been done before in this country

taconnol wrote: »

the customer is paying for the cost of production plus profit for the farmer retailer.
.

spot the difference?

taconnol wrote: »

So how could a farmer-led co-op undercut a supermarket?
.

by becoming so big that the supermarkets would either have to listen to them or buy their milk elsewehre

that exactly the same concept as Trade Unions operate on, one worker doesnt have much say, but a group of workers can hold a country ransom