As Tesco posts losses of almost €9bn (£6.4bn) last year, the largest single buyer of Irish food products must face the reality of accepting lower margins rather than cutting prices on suppliers.

Tesco, which is one of the biggest customers of Irish beef, made a trading profit of £1.4bn (€1.9bn), down almost 60%. But it was the number of write-offs and one-off charges to the tune of £7bn that drove the company deep into the red. Sales were back 3% overall, to £69.7bn (€96.8m). It was also a year that saw its chief executive Philip Clarke ousted in an attempt to turn around the ship and put an end to the plummeting market share losses.

New chief executive Dave Lewis, who is just in the door from Unilever, said the results reflect “an erosion of our competitiveness over recent years”. He said that they are now putting customers back at the centre and will focus on the fundamentals of availability, service and targeted price reductions.

Similar to many of their UK competitors, it is likely Tesco will “invest in lower prices” to drive shoppers in. What this effectively means is that Tesco will try drive prices further down to take share.

This will do nothing to reassure farmers or suppliers, whose fears are that these losses will turn the screw on them as the company tries to recoup some its losses.

Tesco has for years been harvesting higher margins compared to its rivals and needs to face the new reality of lower margins. The new boss must now forget the legacy margin, which has been around 5% and more than double the industry average of 2%.

Last week, Tesco lost its spot as Ireland’s largest supermarket, as more people decided to shop elsewhere. Ireland exports more to Tesco than to France, Germany or the US combined and Irish exports to Tesco last year were valued at €705m.