Lidl and the IFA: Why

Why has the IFA decided to pick a fight with the discounters?

L i d l h a s b r o u g h t t h e I r i s h F a r m e r s A s s o c i a t i o n ( I F A ) t o c o u r t o v e r c l a i m s t h a t t h a t i t i s m i s r e p r e s e n t i n g i t s o w n - b r a n d m i l k b u t i s t h e I F A j u s t l o o k i n g t o h i g h l i g h t s q u e e z e d m a r g i n s i n t h e a b s e n c e o f a f o o d o m b u d s m a n ? F i o n n u a l a C a r o l a n r e p o r t s

Farmers have been complaining of getting too low a price for their produce whether that be milk, vegetables or beef for as long as we can remember. Retailers are often criticised over discounting of vegetables in the lead up to Christmas. Due to a small number of large retailers controlling the market, the farmers’ bargaining power has dwindled over time. This is why the government is looking to establish a food ombudsman in Ireland to rebalance the power.

Following a Sunday Independent ad on 14 March, Lidl Ireland brought a case before the High Court to refute claims made by the Irish Farmers Association that it has misled customers. Lidl said allegations that its own-brand milk is not Irish are untrue and defamatory.

Meanwhile, IFA president Tim Cullinan said the reason they launched the campaign was to highlight that both Aldi and Lidl were allegedly using fictitious dairies and creameries in their branding and that retailers’ own brands were destroying margins and misleading consumers along the way.

“They are using their own brands to drive down the prices they pay to their suppliers,” Cullinan said. “These brands displace wellestablished ones that return a higher margin to farmers.”

Own-brand now accounts for 80% of milk sold in the Irish market and the farmers’ fear is that consumers are choosing own-brand milk over co-op branded milk, which commands a higher price because, the IFA claims, they believe that the likes of Coolree from Lidl and Clonbawn from Aldi are actual dairies and consumers think they are supporting local Irish farmers directly.

The IFA added that the established brands are trusted and “cannot be sidelined”.

The IFA is hoping that a new food ombudsman/regulator, promised by the government, will deliver full transparency on labelling and pricing and rebalance the trading arrangements between retailers and suppliers. “As farmers we have to get a better return,” Cullinan said. “Our food is produced by real farm families who are working around the clock and to the highest standards.”

Lidl and Aldi refute claims

Lidl says that the claims made by the IFA are extremely damaging to its reputation and wants an injunction to be applied under Section 33 of the 2009 Defamation Act, which would stop the IFA publishing such statements.

Represented by Martin Hayden SC, and Jennifer Goode BL, Lidl stated that its ownbrand one-litre milk comes from Arrabawn in Co Donegal, while its two and three-litre milk is supplied by Strathroy in Omagh, Co Tyrone.

Lidl claims that it never represented that its milk comes from a creamery or dairy called ‘Coolree Creamery’ and that the brand is a registered trade mark for its own product. Lidl also rejects claims that it has engaged in a branding strategy to drive down prices paid to dairy farmers, who it says are paid via milk processors for all product supplied. Other retailers get their milk from some of the same processors. According to Teagasc, 14 milk processors are engaged in milk collection and processing in Ireland.

Futhermore in a statement to the Irish Farmers Journal, group buying director for Aldi Ireland John Curtin said 100% of Aldi’s Clonbawn branded milk and cream was sourced from ROI farms.

The National Dairy Council mark refers to milk that is produced and packaged in the Republic.

“The majority of our milk is processed in the Republic of Ireland and carries the NDC mark, but as some of our milk is packed in Omagh, it therefore cannot carry the NDC mark”, Curtin said.

Lidl has brought a case against the Irish Farmers Association, stating that the claims made by the IFA about its own-brand milk are extremely damaging to its reputation

Farmers’ frustrations

This case brings to light how large retail has the ability to devalue produce from Irish farms through own-brand tactics. The question is whether Aldi and Lidl were used as a ploy to simply highlight farmers’ frustrations at low margins in general? After all, the farmers need to keep the pressure on to stop margins eroding further. Lidl and Aldi might have been called out this time but other retailers could potentially be in the firing line soon too.

IFA’s Liquid Milk chair Keith Boyle told the Irish Farmers Journal that the IFA planned to highlight further injustices in the industry.

“Unfortunately liquid milk is not the only category of farm produce that is suffering due to the erosion of farmer margins by retailers,” Boyle said. “The IFA plans to continue its campaign to highlight the issue across other farm produce categories. That has to stop – otherwise the inevitable outcome will be the exit of farmers from fresh produce markets.”

The judge has adjourned the case by Lidl against the IFA until later this month. The hope is that these kinds of disputes between the farming community and the retail sector become fewer with the arrival of the food ombudsman who can hopefully dissolve these issues before they end up in court like this one. ■