# "90%  think legislation should force supermarkets to pay a fair price to farmers"



## Brendan Burgess

I heard this on the 7 am news on RTE  Radio 1 this morning. 

Here is the heading on the RTE website 

*90% of consumers want new laws to protect farmers*



> Almost 90% of consumers believe that legislation should be introduced to  ensure that farmers receive a fair price for their food from  supermarkets, according to a new Ipsos/MRBI survey.


The RTE website does mention that the survey was commissioned by AgriAware a farming body but the radio news did not. 

I wonder where the sample was chosen from? 

I would like to see the question which was asked?


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## SoylentGreen

I was happy to pay 6c for my vegetables at Christmas and delicious they were too. I am lucky that I have an Aldi and Lidl within a mile from my home as well as a SuperValu. I enjoy their weekly 49c selection of vegetables. This week I had a cabbage, turnip, carrotts, potatoes. scallions, pears, tomatoes, mango. All lovely, all fresh all less than 50c each.
I am off now to buy my loose pistachio nuts from Aldi that are far cheaper than those packaged variety. I will also pay 79c for a packet of vegetable seeds from either Aldi or Lidl rather than pay over €3 elswehere for too many seeds that I will never get to use.
Later on today I will phone around to get a better deal on my house insurance and I will check pumps.ie to see who has the cheapest petrol. Last week I picked up return flights for two to France with Ryanair for less than €100.
I used a couple of coupons during the week to get a discount on a very tasty breakfast in McDonalds and used some coupons to get a discount on some pizzas as well.
I am happy to give my business to those companies and people who provide me with what I want rather than what they want.


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## T McGibney

Our national news media seems incapable of distinguishing genuine news from sectional self-serving lobbying and spin.

From my knowledge of farmers, the vast majority of them wouldn't for a minute support further socialist-style price-fixing laws in their sector, which is already all but choked by red tape.


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## Janet

I'd find it very interesting to know what kind of sample they used to. While I can believe that many people would agree that farmers should get a fair price for their product (especially if the question were framed in such a way as to make them seem very mean/nasty if they answered to the contrary), I think you'd have a tough time finding 90% of consumers who are willing to put their money where their mouths are!


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## T McGibney

If you ask anyone "Do you think laws should be introduced to compel supermarkets to pay a fair price to farmers?", they will almost invariably say "yes".

This is not news.

(The fact that supermarkets don't buy produce from farmers, but from processors and wholesalers, is neither here nor there, but it starkly illustrates the infantile level of the coverage.)


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## Sunny

The question asked is here.

http://www.irishtimes.com/news/consumer/most-consumers-against-vegetable-price-wars-1.1739299


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## T McGibney

Sunny said:


> The question asked is here.
> 
> http://www.irishtimes.com/news/consumer/most-consumers-against-vegetable-price-wars-1.1739299



No its not.

(It also seems there was more than one question.)


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## Brendan Burgess

I emailed AgriAware (using the form on their website)and asked for a copy of the report and the survey questionnaire used.

The email was bounced back. 

According to my own research...

"99% of consumers hate having to fill in forms on websites instead of sending simple emails. 100% hate when they are not answered"


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## Gerry Canning

With the farmers on this one.

On potatoes; Mr Farmer gets 20% , he has done the work/risk etc. 
By sale time, Mr Seller etc get 80%.
Given that Mr Farmer has graded/washed/packaged and probably delivered the spuds ,ie done the work it is just unfair that  Mr Seller takes 80%.

Today Mr Farmer on potatoes gets circa 100 euro per ton @ production cost 200 per ton. @ 17 ton to acre he loses ,1700 per acre.
Good grower @ 200 acres loses 340,000. 
Very quickly we could lose a sector that we are good at and that gives employment.
eg. We lost Irish Sugar when we could still have very good employment in it ,by stupid actions by our last government.It means we pay top price for sugar without having the skill/employment benefits of our own industry.
eg. Rooster potatoes are still on patent and an Irish company/irish employer benefits.

I would be very worried if we left ourselves on any food we can efficiently produce to the vagaries of the market.
Very few consumers are as Janet says are willing to put their money where their mouths are, but ask yourself , if we lose potato growers and there is a food shortage , do you think we will still get food artificially cheap.

I sense an anti farming note in the thread.
From my view an artificial price will not help us in any way other than short term.


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## 44brendan

Potatoes is probably not the best example as in general most of the good potato farmers can get a very high per hct return on potato crop (weather permitting). The main issue of concern for farmers currently is beef prices. These are controlled by a small cartel of beef processors and it is extremely difficult for even the best of farmers to make a profit on beef. most are making losses and these losses are sustained by the Single Farm Payment. These payments are due to reduce for many farmers from next year and in addition the elimination of milk quotas will encourage farmers to focus exclusively on milk. In countries like New Zealand bull calves are being killed at birth as price achieved is not worth the expense of keeping them! There is profit in beef, but it is being kept by the processors and the supermarkets and as a result we are likley to see a significant shortgage in Irish beef over the next few years.


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## Gerry Canning

44Brendan, 
Nice comment ,on were beef prices are likely to go to.
On the previous threads it was vegetables that were highlighted , hence my Spud comment..I just threw in sugar to show how a viable Irish business was killed.

I wonder when Beef goes up a lot and the carrots cost 1 euro each , will people be so happy to pay ? 

I do believe the worker , in this case Mr Farmer , should be protected from the short-termism of the market.
The Market will willingly hang us all!


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## T McGibney

I think you are missing the point Gerry that farmers don't supply supermarkets, they supply wholesalers and processors who supply supermarkets. Hence the question of whether or not supermarkets "are paying fair prices to farmers" is moot.

There is a host of reasons why farmers receive a small proportion of the ultimate sale price of food products, but these are outside the scope of the Agri-Aware "survey" and by extension, this discussion.

The Aldi 6 cent carrots promotion seems to be a bone of contention here. I don't for a second understand why. Price promotions are a fact of life and are driven by marketing considerations, in an effort to increase interest in, and demand for, consumer products.

Should the farmer lobbies jump up and down every time a supermarket organises a "buy one get one free" promotion on, say, bread or yoghurt? 

And its not just supermarkets. Companies like Glanbia and Kerry (where farmers hold significant influence if not outright control) often run price promotions including free sample offers on their own product ranges. These companies are expert marketers, and have a tremendous track record in both marketing and creating massive added value both for themselves and the farmers who supply them.

Btw Gerry, I am most certainly not anti-farmer. I come from a farming background, have many farming clients, and have several close relatives & friends who are farmers.


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## ang1170

T McGibney said:


> I think you are missing the point Gerry that farmers don't supply supermarkets, they supply wholesalers and processors who supply supermarkets. Hence the question of whether or not supermarkets "are paying fair prices to farmers" is moot.


 
 I don't believe that to be the case for much fresh produce: supermarkets deal with a small number of high volume producers direct.

 This issue is the imbalance in power in the relationship: it rests almost entirely with the large supermarkets, who use predatory pricing to put independent retailers out of business, so producers end-up with nowhere else to sell their product.

 For sure the survey is biased (you can get pretty much any response you like, depending on the questions asked), but the underlying truth is there.

 The food business is not a free and open market, with multiple producers, wholesalers and retailers all competing and the end consumer benefiting as those rubbishing the survey seem to think. There is a massive imbalance in power in the relationships, and it is naïve to think it's in consumers best interests to pay a few cents for goods that cannot be produced at that level. 



T McGibney said:


> The Aldi 6 cent carrots promotion seems to be a bone of contention here. I don't for a second understand why. Price promotions are a fact of life and are driven by marketing considerations, in an effort to increase interest in, and demand for, consumer products.
> 
> Should the farmer lobbies jump up and down every time a supermarket organises a "buy one get one free" promotion on, say, bread or yoghurt?


 
 If retailers want to promote goods by reducing their sell price, there's no issue. However, that's not what happens: this cost of the promotion is forced back on the producer, who is often forced to sell at below cost. The cost of the promotion is borne by the producer, the benefit (increased sales of other goods) received by the retailer. It is a completely unbalanced relationship.


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## T McGibney

ang1170 said:


> I don't believe that to be the case for much fresh produce: supermarkets deal with a small number of high volume producers direct.



Maybe so for certain categories for veg, but certainly not for meat or meat products. Equally, I wouldn't necessarily class a large scale "grow, package & market" vegetable operation as a farmer, just as I wouldn't count Larry Goodman as a farmer, although he technically is one.



ang1170 said:


> If retailers want to promote goods by reducing their sell price,  there's no issue. However, that's not what happens: this cost of the  promotion is forced back on the producer, who is often forced to sell at  below cost. The cost of the promotion is borne by the producer, the  benefit (increased sales of other goods) received by the retailer. It is  a completely unbalanced relationship.



Why then do large and very successful companies like Kerry & Glanbia persist in using such promotions in their own marketing campaigns?


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## Gerry Canning

T Mc Gibney; I am not trying to run a pro V anti farmer issue, and do accept that any larger farm is in the business of farming,
.
My big concern is that, I do not wish  food to  become like hard goods eg cars . Food is too important to leave to the market.
As a society we put  protection on a variety of businesses that we feel are vital.
I just think food is one of them. 
I have not read the survey but would think that instinctively we all know that for our long term security our producers need some protection from whoever buys/sells produce from the farm..


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## DerKaiser

I do think that the wildly fluctuating prices received by food producers is a concern for us all.

I'm a reasonably strong believer in free markets, but I've come round to the view that an aggressively "laissez faire" stance in relation to demand and supply of basic human needs like food and shelter will lead us into trouble.

In relation to housing, there's not many would now agree that a lack of action on containing the bubble (credit supply, etc) was appropriate.

In the same way, the likes of below cost selling in relation to food could have severe consequences. As an example, there was a trend from a few years ago to switch from crop production to biofuel - this did not help when there were animal feed shortages in recent winters. 

At the moment fluctuating food prices may be bearable as food comprises a relatively small portion of most family budgets (compared to the past or to poorer countries). With a growing world population and threats to food supply, we may come to regret not guaranteeing steady supply through ensuring producers were fairly rewarded.


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## T McGibney

Gerry Canning said:


> As a society we put  protection on a variety of businesses that we feel are vital.
> I just think food is one of them.
> I have not read the survey but would think that instinctively we all know that for our long term security our producers need some protection from whoever buys/sells produce from the farm..



What's the point in doing so if processors, wholesalers and retailers can circumvent this "protection" by simply turning around and importing their product requirements - as is already increasingly the case with liquid milk?


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## 44brendan

Price protection in Agriculture, got us into a situation where there was no onus on farmers to maximise efficiency & productivity. Withdrawal of protections in New Zealand resulted in significant changes in that market. Most of the less efficient producers had to exit farming and were replaced by more highly efficient producers. result was the rapid emergence of NZ as one of the World's biggest suppliers of dairy produce. Protectionism by its very nature protects inefficiency and while Ireland's climate gives us many a reason to complain it is ideal for cheap grass production, which should have resulted in us being up there with NZ in supply of Milk/Beef. The difficulties that farmers are currently experiencing in supply of beef/vegatables is the Cartel approach by the meat factories/supermarkets. There is no simple solution to this and introduction of price protection is likely to lead to more problems than solutions! Just for example, at one end of the scale there are farmers who can produce milk at 6c per litre and at the other end we have many whose production costs are 25/26c per litre. In a free market the latter would either have to improve efficiency or exit the market, thus freeing up the land for more efficient producers.


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## Brendan Burgess

How many people actually think that legislation should be brought in to ensure that the supermarket pays the farmer a fair price? 

I don't think it should be legislated for at all.


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## Janet

I don't know that I think legislation should be brought in to necessarily make supermarkets pay farmers a fair price. 

I do think there could be scope for legislation to rein in supermarkets (and other large buyers such as fast food chains) with regard to some of the less than ethical practices we hear about (insisting on x price then refusing delivery from one farmer because they've already filled their quota with another one). What form that could take I have no idea. Perhaps I'm just being a bit too idealistic and naive. 

And I also think, and have done for many years, that consumers badly need to start thinking more about and caring more about where their food comes from.


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## Deas

My understanding is that farmers are getting the fair market price.  It is the supermarkets that engage in below cost selling after this fact - am I off the mark?  Tbh, this looks like they are seeking a reintroduction of the below cost selling legistlation by another means and that was a disaster for consumers.


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## ang1170

Brendan Burgess said:


> How many people actually think that legislation should be brought in to ensure that the supermarket pays the farmer a fair price?
> 
> I don't think it should be legislated for at all.



I don't think so either, at least in those terms: how on earth would you implement a "fair price"?

However, there are two significant issues that the "free market" people seem to be ignoring here:

1. It's not a free market: there are very significant distortions caused by having a very few companies exploiting their dominant position. Hence some form of regulation is needed to counteract this.

2. Food is not like other products. Personally, I wouldn't be that bothered if I went to the shops and I couldn't get a TV or particular car or whatever, but it would be pretty serious if food wasn't available, or it was priced beyond most people's means. Thus, for example, it is not a good idea to become totally dependent on imported food, and it's important to maintain a locally sourced food supply.

I'll come back to a point I made earlier: it's naïve to think that selling items at what is clearly an uneconomic price is somehow good for consumers in the long or even medium term.


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## T McGibney

ang1170 said:


> 1. It's not a free market: there are very significant distortions caused by having a very few companies exploiting their dominant position. Hence some form of regulation is needed to counteract this.
> 
> 2. Food is not like other products. Personally, I wouldn't be that bothered if I went to the shops and I couldn't get a TV or particular car or whatever, but it would be pretty serious if food wasn't available, or it was priced beyond most people's means. Thus, for example, it is not a good idea to become totally dependent on imported food, and it's important to maintain a locally sourced food supply.



1. There are more big players in the retail sector than ever before. Aldi, Lidl and Musgraves have joined Dunnes & Tesco at the top table this century, although admittedly Superquinn is no more. Meanwhile, since the abolition of the Groceries Order that previously banned below cost selling, the farming & food production sectors have not suffered to any degree, in fact they have boomed.

On that basis I'd argue that the case for regulation is no greater nowadays than it was at the time of the abolition of the Groceries Order.

2. Like it or not, our retailing sector is utterly dependent on imported food. The notion that all the food we eat is of domestic origin is a fantasy.




ang1170 said:


> I'll come back to a point I made earlier: it's naïve to think that  selling items at what is clearly an uneconomic price is somehow good for  consumers in the long or even medium term.



So price promotions (early bird discounts, free samples, buy one get one free, x% off, etc) are bad for consumers?


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## Brendan Burgess

I got this information from AgriAware 



> The research was  carried out by IPSOS MRBI. They choose the sample to be questioned in  the usual manner. 1,003 adults aged 15 + years were surveyed in February  2014.
> 
> Of  these 49% were male and 51% female. The regional breakdown was:  28%  Dublin, 26% rest of Leinster, 27% Munster, 18% Connacht/Ulster.
> 
> The following is the wording that was used for the questions:
> 
> Q.  In your opinion, should legislation be introduced to ensure that  farmers receive a fair price for their food that is sold in  supermarkets?
> 88% of respondents answered Yes.
> 
> Q.  Before Christmas, supermarkets were selling  vegetables way below the  cost of production.  In your opinion, is this good for the consumer in  the long term?
> 64% answered No.



I think I will commission Ipsos to ask 1,000 people a question: 

"Do you welcome price wars among supermarkets which gives consumers fair prices for their food?"


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## ang1170

T McGibney said:


> So price promotions (early bird discounts, free samples, buy one get one free, x% off, etc) are bad for consumers?



 Absolutely not: as I said, if any business wants to discount or do whatever promotion they like, then fair enough.

 That's completely different to a retailer forcing a supplier to sell below the supplier's costs by (ab)using their dominant position. As I said, it's naïve to think that can continue for any length of time without long-term damage to consumer interests.


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## T McGibney

ang1170 said:


> Absolutely not: as I said, if any business wants to discount or do whatever promotion they like, then fair enough.
> 
> That's completely different to a retailer forcing a supplier to sell below the supplier's costs by (ab)using their dominant position. As I said, it's naïve to think that can continue for any length of time without long-term damage to consumer interests.



Competition law is specifically geared to deal with companies abusing their dominant position in a market.

So why do we now need even more legislation (along with the added compliance cost & bureaucracy)?


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## ang1170

T McGibney said:


> Competition law is specifically geared to deal with companies abusing their dominant position in a market.
> 
> So why do we now need even more legislation (along with the added compliance cost & bureaucracy)?



I never said we did: the only points I am making are that the current grocery market is distorted and not functioning as a normal competitive market, and that food is not like other products. Hence special provisions may be required in relation to supply and cost.

Maybe just enforcing what's there already would be sufficient. If it isn't, then we should introduce more legislation. Like many things in this country, though, we'd be better off enforcing what's there rather than the government patting itself on the back for introducing yet more legislation that is promptly ignored.


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## nai

Speaking to a friend in the industry and from my understanding of the Aldi / Lidl basement vegetable prices - Aldi / Lidl take a profit equalization view which works something like this : 
- At Start of year they set an average target profit per piece of vegetable / fruit for the year
- Know how much they can buy the vegetable as the seasons proceed and supply/demand varies
- Set the price point for various times of the year, keeping the average target profit in mind
At end of year they will have balanced the very low 5c prices with higher prices which allows them to meet their target profit.
Simples really and they get loads of customers through the doors by varying their veg bargains.


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## SlurrySlump

nai said:


> At end of year they will have balanced the very low 5c prices with higher prices which allows them to meet their target profit.
> Simples really and they get loads of customers through the doors by varying their veg bargains.


And the canny shopper can exploit the highs and lows just as some people do with the airlines and other businesses...


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## nai

SlurrySlump said:


> And the canny shopper can exploit the highs and lows just as some people do with the airlines and other businesses...



Absolutely !


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## T McGibney

ang1170 said:


> the only points I am making are that the current grocery market is distorted and not functioning as a normal competitive market, and that food is not like other products.



It's easy to make those points but maybe less easy to prove them. Is the grocery market really distorted? 

The facts suggest otherwise:

1. There are more big players in the retail sector than ever before.

2. Farming & food production are booming, despite an economic recession. 

3. Most of our food product is exported while most of our food consumption is imported. 

So our producers are far less dependent on domestic supermarket chains than they were say 20 years ago.

Where's the problem?


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## Brendan Burgess

T McGibney said:


> 3. Most of our food product is exported while most of our food consumption is imported.



Hi Tommy

Three good points, but that one is startling. 

If Irish supermarkets don't pay the farmer a fair price, let the farmers export their produce.

Come to think of it, how could the legislation work?  Would it force the Irish supermarkets to pay a "fair" price for the food imports as well? 

Brendan


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## ang1170

T McGibney said:


> It's easy to make those points but maybe less easy to prove them. Is the grocery market really distorted?



 OK, a couple of examples:

 1. Company A supplies product to supermarket X. They get a call one day saying if they want to continue to supply to X they have to drop all their other customers.

 2. Company B is supplying product to supermarket Y. Periodically, they are told they must supply that product, at below the cost of B's production, so that Y can offer it as a promotion.

 Do you think that these are market distortions and the supplier is simply free to go elsewhere? Keep in mind that the concentration of market power in a very few large retailers means there's little in the way of options to sell to an independent wholesale market.



T McGibney said:


> The facts suggest otherwise:
> 
> 1. There are more big players in the retail sector than ever before.
> 
> 2. Farming & food production are booming, despite an economic recession.
> 
> 3. Most of our food product is exported while most of our food consumption is imported.
> 
> So our producers are far less dependent on domestic supermarket chains than they were say 20 years ago.
> 
> Where's the problem?


 
 Your facts are of limited relevance. Yes, most produce is exported because it is focussed in a small number of areas (beef etc.), and we simply couldn't consume the amount produced. Yes, production in some (export-led) sectors is booming, based on increases in global food prices. The exact numbers of big players fluctuates, but their combined market dominance continues to increase.

 The supermarket's PR machines have done a good job if people think all is rosy and we're well served by a competitive market. It's so much easier to indulge in some headline grabbing promotions than have some real competition.

 If all was well with competition, one would expect prices to lower and align with other markets: the fact is margins are much higher here. Of course, it's next to impossible to find out what they actually are at a detailed level; as the supermarkets would say: move along here, nothing to see......


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## T McGibney

ang1170 said:


> OK, a couple of examples:
> 
> 1. Company A supplies product to supermarket X. They get a call one day saying if they want to continue to supply to X they have to drop all their other customers.
> 
> 2. Company B is supplying product to supermarket Y. Periodically, they are told they must supply that product, at below the cost of B's production, so that Y can offer it as a promotion.



These examples are *not* evidence of market distortion.



ang1170 said:


> The supermarket's PR machines have done a good job if people think all  is rosy and we're well served by a competitive market.


The fact that our food industry is booming amidst a recession has nothing to do with supermarket PR. 


ang1170 said:


> It's so much  easier to indulge in some headline grabbing promotions than have some  real competition.


Do you really think that Agri Aware want "real competition"?



> If all was well with competition, one would expect prices to lower and align with other markets:


Prices have lowered and aligned with the UK - that's why the cross border shopping boom came to an end. Even the likes of Asda have found it hard to beat Aldi or Lidl on price.


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## Gerry Canning

Well folks; 
True Ireland exports a lot of agri produce.
Beef, milk, lamb and then more beef,milk, lamb.

We import a lot of veg/fruit that we could/should produce at home.
So if we let the market decide and we at some stage may have to live on Beef,Milk and Lamb.

I am just suggesting, lets make sure we keep Farmer Carrot, Farmer Apple  etc alive.

I think I would prefer some control over variety.


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## T McGibney

Gerry Canning said:


> I am just suggesting, lets make sure we keep Farmer Carrot, Farmer Apple  etc alive.



How do we do that if we make it more difficult for retailers to purchase from them, relative to foreign competitors? Serious question.


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## ang1170

T McGibney said:


> These examples are *not* evidence of market distortion.



 I guess it depends on what you call market distortion. I'd say it's a distorted when suppliers don't have an effective choice of where to sell their products due to market dominance and cartel like practices in the market.



T McGibney said:


> The fact that our food industry is booming amidst a recession has nothing to do with supermarket PR.



Your statements are increasingly bizarre - I never suggested it did. Quite the opposite: I gave the reason (increase in world food prices, leading to export business booming).

My point about supermarket PR was that it was clearly working if they have people believing there is a competitive market working to consumer's interests. 




T McGibney said:


> Prices have lowered and aligned with the UK



The facts are otherwise. Household spending on groceries is still significantly more here than the UK, so either we're indulging ourselves with more expensive items, or the cost of those items is higher.


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## T McGibney

ang1170 said:


> I guess it depends on what you call market  distortion. I'd say it's a distorted when suppliers don't have an  effective choice of where to sell their products due to market dominance  and cartel like practices in the market.



You're saying there's a cartel even as Aldi & Lidl have grown their business hugely in recent times, in a shrinking market?

You're saying suppliers don't have an  effective choice of where to sell their products, even as their profits are rocketing, and export (and domestic) markets are crying out for their produce?



ang1170 said:


> My point about supermarket PR was that it was clearly working if they have people believing there is a competitive market working to consumer's interests.



Does the increase in Aldi & Lidl market share not indicate competition in the market?



ang1170 said:


> The facts are otherwise. Household spending on groceries is still  significantly more here than the UK, so either we're indulging ourselves  with more expensive items, or the cost of those items is  higher.



Why have people stopped shopping north - even in border areas?


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## amethyst

>> introduction of price protection is likely to lead to more problems than solutions

Yes.

The actual question asked in the survey was not going to yield a useful answer, because most people are completely ignorant of the laws of economics, but rather a predictable answer to satisfy an agenda.

Do a survey asking people *any* question of the following formula:

*Do you think the government should introduce laws to make sure that [INSERT GROUP THAT EVOKES SYMPATHY]  receive a FAIR wage/price for what they DO/PRODUCE?*

You will probably get 90% YES if you are true to the scheme I gave.  It means nothing.

With words like *'fair'* built in, the question is like asking people *if the government should pass laws to stop people hurting puppies!*  I hope we don't have anyone here who would say 'no' to the question, do we?


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