it is no accident that the Government's independent review group, appointed this week to examine allegations of anti-competitive behaviour in the meat industry, is also looking into the differential between the price paid by meat processors and the retail price paid by consumers.
The issue has already been investigated by the Minister of State for Consumer Affairs, Mr Tom Kitt, who consulted Tesco, Dunnes Stores, Musgraves, Superquinn and RGDATA on the matter two years ago.
While the multiples maintained that reductions in prices paid to processors were reflected in retail prices, official figures show average beef prices declining at a lesser rate than the prices paid to farmers by processors.
"When producer prices increase, retail prices move up very significantly. But as a general rule, retail prices did not respond to falling producer prices to the same degree," an IFA spokeswoman said.
In a 1997 study on food prices, the IFA claimed that retail prices for food in general had increased by 33 per cent between 1985 and 1997, while the rates paid to farmers had increased by only 5 per cent.
This is reflected in other data. According to An Bord Bia, prices paid for R3 heifers - a typical grade of animal used by processors for sale in the home market - decreased by 18 per cent from 92.5p per pound in 1990 to 78.5p per pound last year. Central Statistics Office figures for the same period show retail beef prices declining by 7 per cent. (Sharper declines were recorded between 1995 and 1999, taking account of the BSE crisis).
The key issue for the independent group will be to establish how wholesale prices have changed in the context of falling producer prices. This, however, may be difficult as individual contracts between retailers and processors vary according to product specification and volumes.
Chaired by Mr Kevin Bonner, a former secretary general at the Department of Enterprise, Trade and Employment, the group's other members are Mr Seamus Sheehy, UCD's professor of applied agricultural economics, and Mr Colm McCarthy, a consultant with DKM Consulting.
Welcoming the group's investigation, Mr Kitt gave a strong indication of his thinking, suggesting that there was room for manoeuvre on the part of meat processors and retailers. He said he was still concerned at the differential between the retail price and the rates paid by processors to farmers.
"My view here is that the consumer is not being well served. The benefits to the consumer should come from the processing side of the food. But I think there are benefits to be gained from the retail side also."
The related issue, of course, is alleged price-fixing by meat processors. Yet despite persistent claims, the Competition Authority is understood to have produced no prima facie evidence of price fixing in an investigation which has continued since 1997.
Such information would have enabled the Tanaiste to sanction a special Competition Authority investigation under Section 11 of the Competition Act so its absence led to Ms Harney's appointment of the independent group. In any event, the Act dictates that information uncovered by a Section 11 inquiry cannot be used during enforcement (criminal) investigations by the authority.
The Competition Authority investigation was initiated in 1997 when the then Minister for Agriculture, Mr Ivan Yates, wrote to it citing "concerted practices" in the cattle trade. Allegations had first been made in 1996.
Speaking this week, Mr Yates said he approached the authority because he was "totally disillusioned" with the meat industry. Given falling meat prices, the Government and the EU had introduced initiatives to support farmers' incomes but meat processors had used this as an excuse to pay less to farmers for cattle. "There wasn't effective price competition for cattle, particularly in the autumn when volumes were very, very high," he said.
Announcing the investigation to the media at the time, Mr Yates's spokesman said it was "unprecedented". More than 2 1/2 years later, however, the authority has produced no report. A key factor here is that the IFA apparently produced no evidence of price fixing to the authority. This was stated in a paper produced for the Cabinet during the week, although the IFA denied that it did not supply information to the authority.
A further issue is that people familiar with the authority's inquiries have privately expressed doubt that Mr Yates should have put this information into the public domain.
The authority's general policy is to neither confirm nor deny that an investigation is under way, as to do so would deprive it of the element of surprise. In theory, this gives those allegedly engaged in anti-competitive practice an opportunity to destroy or hide potentially incriminating documentation before the investigators arrive.
Asked this week whether it had been imprudent to state publicly that allegations had been referred to the authority, Mr Yates said he would have been surprised if the information had not been leaked to the media. "A lot of people who had anecdotally made allegations had come forward," he said.
