Opening Address by Minister Michael Ahern to the Food and Drink Industry Ireland Annual Conference

Opening Address by Michael Ahern T.D., Minister for Trade and Commerce to the Food and Drink Industry Ireland Annual Conference ‘Consumer Choice - Innovation or Regulation?’ In the Crown Plaza Hotel, Santry on Thursday 21^st April, 2005

Good morning Chairman, distinguished speakers, Ladies and Gentlemen. It is an honour for me to be here today to give the opening address at this, the 2005 annual conference of Food and Drink Industry Ireland, which has as its theme Consumer Choice - Innovation or Regulation? FDII has been to the forefront in addressing the challenges that face the food and drink industry and is to be praised for initiatives such as its Nutrition and Health Foundation and involvement in the Ireland Food and Drink Industry Awards.

Looking through the Conference Agenda for today I was pleased on two fronts, I was pleased to see that the Conference is going to be addressed by eminent speakers who will deal with food safety; and nutrition and heath issues, all key issues for the industry. I am also delighted to see that the Conference will focus this afternoon on the social responsibility and innovation agendas.

I would like to open this Conference by giving participants some food for thought (if you will pardon the pun) and by questioning the very title of the Conference. The Conference title suggests that Consumer Choice is about Innovation or Regulation and this is reinforced by the photograph on the Conference brochure which shows two signposts pointing in different directions. I would like to suggest that Consumer Choice is about proportionate measures of both regulation and innovation.

Regulation

While it is not popular to say it, regulation is undoubtedly a necessary part of any modern society. While we are seeing a welcome resurgence of local farmers’ markets, developments in transport, refrigeration and processing methods means that the average consumer now has a vast array of food and drink products from across the world from which to choose.

I am sure you would agree that information is power and the average consumer is at a disadvantage when dealing with the analytical firepower of a large, well-resourced and organised industry sector. It is the responsibility of the regulatory framework to protect the consumer and ensure that the consumer is armed with the information they require to make informed purchasing decisions.

The average consumer’s concern that products be safe is reflected in the number of speakers addressing the topic of food safety here today. I would suggest that it would be impossible to address these concerns satisfactorily in the absence of regulation. I would also point out that regulation protects not just the consumer but also the producers and traders who sell safe, top quality products. It levels the playing field and ensures that rogue producers and traders get the red card.

Furthermore, given that unsafe and unhealthy food can have life and death impacts, I would contend that regulation can play a balancing role in the marketplace – it can bring to the marketplace, which has to operate on the basis of economic rules, the weight of public interest concerns which might otherwise not be represented there.

I accept that it is not good enough for legislators to exhort industry to innovate to the benefit of the Irish economy – there is an onus on us to be innovative also, specifically in the area of regulation. We must endeavour to ensure that our legislation moves with the times and we must not unnecessarily tie business up in red tape. With this in mind, the Government last year launched a White Paper on Regulation setting out our action plan for improving the quality of regulation and the regulatory process. We followed this up later in the year with the publication of the Statute Law Revision (pre 1922) Bill 2004 to repeal 91 Acts which are still on the Statute Book but are no longer required.

There must be a comprehensive and easily understood body of consumer protection law in place. Consumers must know their rights and they must have easy access to redress when those rights are denied.

There has to be adequate sanctions against unscrupulous traders who break the law and take consumers for granted. And it is not sufficient to focus only on the national picture, we must also have regard to EU and world-wide developments so that we play our part in protecting and informing our consumers wherever and however they shop.

Just three weeks ago my Department published a Bill which will increase outdated financial penalties for breaches of seven pieces of consumer legislation. My Department is also engaged in a comprehensive review aimed at the consolidation over a period of three to five years of the main pieces of consumer legislation. These are currently spread among a large number of statutes, many of which date back a century or more, making them difficult for both businesses and consumers to access and interpret.

The first phase of the review involves the transposition of the EU Directive on Unfair Commercial Practices, adopted by the Council last Monday, and the revision and, where relevant, repeal of the domestic legislation within its domain. This proposal is an example of the benefits which EU membership is bringing to Ireland - it is an important Directive which will establish a common legal framework for the regulation of unfair business-to-consumer commercial practices across the European Union.

The Government is determined to ensure that consumer law continues to keep pace with the rapid rate of economic development, new trading mechanisms and new behavioural trends. Key to this is the work of the Consumer Strategy Group which was established in March 2004 to advise on the development of a national consumer policy.

The Group was established against a background of concerns at the lack of a discernible national consumer strategy, the increasing international focus on empowerment of consumers, and perceptions on the part of certain groups of consumers and various media and economic commentators that Irish consumers were not getting a fair deal.

The Group presented its final report to Minister Micheál Martin on 2^nd March last. The Group’s report contains a significant number of recommendations involving a variety of different Government Departments and Agencies whose activities impact upon the interests of consumers. The Minister has been discussing the CSG Report and its recommendations with his government colleagues and he expects to publish the report and announce his intentions in relation to progressing the Group's recommendations in the coming weeks.

One of the issues considered by the CSG is one of great interest to many here today – the Groceries Order.

There has been much debate as to the merits or otherwise of the Order in managing grocery prices and many business people have contacted my Department seeking the retention of the Order in its present form. I am also very aware of the recent recommendation of the Oireachtas Committee on Enterprise and Small Business that the Order be retained.

However, there is the argument put forward in some quarters that the Order is keeping prices higher than they otherwise might be.

I assure you that all of these arguments will be considered before deciding what action is appropriate and all interested parties will be invited to submit their views as part of a national consultation process.

Innovation

The food and drink industry makes a significant contribution to Ireland’s economic and social development. The indigenous food industry is worth over €16bn per annum which represents about 9% of gross domestic product. It has created and sustained an enormous amount of employment directly and indirectly. There are over 50,000 consumers who actually work in the food industry, with a further 90,000 in jobs in supply and ancillary services. These jobs are spread throughout Ireland in over 700 companies.

Food and drinks companies have built up a successful domestic market and are also responsible for over €7bn in exports. It is particularly interesting to note that 400 of these firms are making speciality food products, which have emerged as a result of their ability to develop products which meet the requirements of increasingly discerning consumers.

I believe that potential for future growth in the industry is dependent on adopting a consumer led approach supported by innovation. The term innovation brings to mind cutting edge, scientific developments and, indeed, these are vital in the food and drinks sector. I read, for example, that scientists in the UK and Norway are developing nanotechnology which could revolutionise traceability throughout the supply chain, as well as providing early detection of disease and pathogens in food.

The Irish consumer is faced with a choice between 23,000 different products on a visit to the average Irish supermarket today and this is a tribute to innovation in the retail sector. Consumers also enjoy greater choice today as regards the type of retail outlet they can visit from multiples like Dunnes Stores and Tesco to the newer discounters, such as Lidl and Aldi, to their local convenience stores. I note that 14 new SuperValu stores opened in 2004 and 29 new Centra stores. This growth in convenience retailing reflects changing lifestyles over the past 20 years and it is a niche in the market that I am sure is with us to stay.

The modern consumer operates under increasing time pressures in a fast moving world. Furthermore, the modern Irish consumer is frequently a migrant worker or foreign student bringing with them their own specific tastes for food and drinks – welcoming the familiar products they see, for example, in the discounters or the Asian food stores which are becoming a feature of our cities and towns. The types of retail businesses and food and drinks products which have been emerging in recent years have obviously been developed with these factors in mind.

A broad view of innovation encompasses this focus on the consumer’s needs and tastes and their desire for good customer service. A satisfied customer will obviously return when the need to purchase the same product or service arises in the future. A satisfied customer is one who will recommend a supplier of a product or service to both family and friends. Satisfied customers help to grow a business. This implies that it is vital for industry to record consumer views and experience and feed these into their continuous improvement systems so that any issues arising can be addressed by innovation.

I do not see this type of innovation as being in conflict with or being restrained disproportionately by regulation. The type of regulation we have in place to protect consumers ensures, for example, that the items they buy are clearly priced and where they are sold by volume they are unit priced so that the consumer can easily compare prices of goods that might be sold in different sized containers. These are the very basics that a consumer can expect.

However I note that the innovative retailers go beyond these basics, for example, if a consumer finds a product priced incorrectly they will refund the full price of the good to the consumer. I would suggest that this is an area to which retailers could give further thought. For example, I know that shelf edge labelling has been a useful innovation. However, we need to keep the focus on the consumer who needs to see the price clearly in order to make an informed purchasing decision.

It is important that retailers consider addressing the needs of consumers, including consumers whose sight may not be what it was, before regulation has to do it for them.

I would contend that far from opposing or stymieing innovation, regulation actually signals to business the bottom line that is required by the public. It is our job as legislators, producers and suppliers to work together to keep abreast of developments in a fast moving world and identify what new, emerging consumer needs and demands need to be addressed both by regulation and innovation.

Leaving you with that thought, I would now like to hand over to the Conference Chairman, Dr. Patrick Wall, and to wish you the very best in your deliberations here today in what will surely be a very thought provoking and productive conference.

ENDS

TC148