Agriculture and Rural Development
Friday 30 June 2000
MINUTES OF EVIDENCE
Pig and Beef Industry
(Ulster Farmers' Union)
Rev Dr Ian Paisley (Chairman)
Mr Paisley Jnr
Mr D Rowe)
Mr C Pogue)Ulster Farmers Union
Mr K Sharkey)
The Chairman: We would like to have a submission from you first of all on the pigs and then go for half an hour and then have a submission on the beef and go for half an hour.
Mr Rowe: Mr Chairman, can I first of all thank you very much for inviting us along to this illustrious Committee? It is nice to be able to talk to those who are in the seat of power in our new dispensation. Can I start by introducing the team that we have brought along today? On my left is Mr Charlie Pogue, Chairman of our Pigs Committee - he will talk on the pigs; on my right is Mr Kenneth Sharkey, Chairman of our Cattle and Sheep Committee - he will deal with the cattle and sheep issues. We have also taken the liberty to bring along with us some of our other members and I will introduce them to you. Sitting in the public gallery is John Gilliland, Deputy President of Ulster Farmers' Union; Lynn Martin, who is Secretary to our Pigs and Poultry and Intensive Industry; Wesley Aston, who is the Director of Commodities; Moyra McMaster, in the second row, who looks after our legislation and commercial affairs in that department, and then Ian Stevenson who is Secretary to our Cattle and Sheep Committee.
The Chairman: Mr President, I was telling them they were going to keep an eye on you fellows today.
Mr Rowe: I'm glad you said it, because I thought it and I'm not allowed to say it, in case we step out of line today. But if we need technical backup they are there in the background to support us. There is no point in you gentlemen listening to me because you have already had the submission in writing from us. There is no point in listening to the monkey when you get the organ grinders along, I brought two organ grinders along to do the speaking. At your request, Mr Chairman, I will hand over to Charlie and start on the pigs, okay?
The Chairman: Thank you very much. You are all very welcome. I'm glad you have your team behind you because it shows the importance that you men reckon that this matter has. It is a matter of the utmost importance to us, a matter of life or death for our industry.
Mr Rowe: Mr Chairman, yes, we regard the matter as very important. We also regard the setting as important as well. So we would like to give at all times our best possible shot.
Mr Pogue: Thank you, Mr Chairman, thank you for your welcome. As you are well aware and you have worked with us considerably closely for the last two years and we appreciate your help, pigs have suffered greatly especially since the fire at Lovell and Christmas which was in June 1998. Since then we have been in disaster and at the present point we are beginning to rise above that, put our head before the parapet and say we are now at break even point or almost there. Having said that, there is still the big debts created during that period as you know, there are high interests to be paid at the present time and there is no maintenance of farm buildings. In fact the average age of herd has gone up considerably and a lot of replacement stock needs to be bought. So it will be a long time yet before pig producers say they are back in profit, having to take all that into consideration. We have, as you have before you, made a joint submission with the Pork and Bacon Forum, it covers all aspects and we did not want to have duplications so we have moved together with them. I am a member of that Forum as well.
The first item that we had on the report was the fairness of the Northern Ireland pig price. We felt there was unequal distribution of profits and throughout the whole time when we are in a loss situation we felt in the producer, processor and retail chain there was sufficient money if the cake had been divided more evenly, producers would not have suffered to the same extent. The Forum carried out at that time and quite recently an exercise to determine what a farmer was getting for the pig and what the retail outlet was getting. You can see from that the difference. I will leave it at that, if you don't mind, to Mr Overend who will go into it later - he was in charge of that exercise and knows exactly how it was carried out, but no doubt he will explain that to you.
Moving on from that, there's the price differential between the Northern Ireland pig and the pig in GB. This has been traditional throughout the years, at times 8p/10p. We felt that because of the fire in Lovell and Christmas and the pigs were being exported to England it reduced the price over there as well as reducing the price here which plunged us into a far deeper crisis than the oversupply of pigs throughout the world created. We were brought into the crisis much earlier and much deeper than any other region or member state of the European Union. And we felt that we should have had some assistance from the Government in finding ourselves in the disaster that we were in because of the exceptional circumstances of the fire, but although we made representation, and you and many others made representation to them, nothing happened. We felt that throughout that period the Government had no vision or will to assist the pig farmers in Northern Ireland. Our pig industry has suffered to a great extent since that, as is indicated by the present number of sows in Northern Ireland which is now, we would estimate, at half what it was at that time. Apart from pig producers losing money --
The Chairman: What would the figure approximately be now?
Mr Pogue: We would estimate at a maximum 35,000 sows in Northern Ireland. That is a guess. The June census has not come out yet, the latest census we have is December 1999 which is 42,000. The number of producers are down to half what they were two years previously to that. A lot of other jobs and ancillary businesses were lost because of that and are still lost so it has created a lot of unemployment within Northern Ireland.
The restrictions placed on us by Government with the stall and tether ban where we had additional welfare standards to meet with, those came into operation on 1st January 1999 at a time when we were at a very low ebb in the pig industry at a cost to the UK pig farmer of around £220 million. We had the BSE tax which added extra costs to our production of £5.26, we estimated, a pig. We had offal disposal, we have the disposal of fallen animals and that is another item which is relevant to the beef industry and all livestock industries in Northern Ireland. We feel that the Government, in order to keep the environment right, should be providing us with a free fallen animal collection service especially now with BSE and all that goes along with it.
The strength of Sterling - what could one say about that? That it has hit us all especially in the pig industry, it has brought a great number of product coming into the market from other member states that are in Euro. We have a land boundary with Euroland which has added more to our difficulty here Northern Ireland because live pigs can be imported and bought in a currency which is a lot lower than ours; that keeps the lid on the prices that we get here in Northern Ireland. So the strength of the Sterling or the weakness of the Euro has added a lot to our problems in the pig industry.
There was a general oversupply of pigs throughout Europe. We understand and we believe that this is now over and we are coming out of that. As I said the Northern Ireland pig herd has decreased much more than other member states - we have fallen by 50% possibly. Some member states might have fallen by 0.5% which is a big difference which, to me, shows how we were affected so much more than any place else.
Factors that are specific to Northern Ireland we feel is, as I have mentioned, the fire at Lovell and Christmas, our additional feed costs, which are somewhere in the region of £10 to £15 per tonne higher in Northern Ireland than in GB - that roughly equates to somewhere in the region of £2.85 per pig. And as I have said earlier, the differential between the GB and the Northern Ireland price. At times we have come up even with the English price and we would like that to be maintained or indeed surpassed if we could to retain a business in Northern Ireland.
Steps to ensure the survival of our pig industry in Northern Ireland. We would like to think that what we have left of a pig industry could be salvaged and a sustainable and viable pig industry could be created in Northern Ireland because it keeps a lot of the family farms going; it also provides other work in the rural communities with meal compounders, ancillary businesses connected with pigs, and we feel that the Government while they, I feel, lack vision and will to do something should, apart from what they have offered us at the Summit in March of this year, and have not yet delivered and may not for the ongoers deliver until this time next year, it is far too late and far too long for pig producers in Northern Ireland to wait. There is the possibility at the present time when prices of stock have gone up that a lot of farmers can now realise that their assets would clear their debt and may get out which may lower our pig numbers even more at the present time. If there was some influx of money into that pig producer's pocket, a supplement on a par with our colleagues on the Southern side of the border - Cavan, Monaghan and Donegal have got, £12,000 to a 100 sow unit, a maximum of that would be very, very useful and we feel that should be looked at and come to Northern Ireland.
The Chairman: You could wind down now so that we get some time for questions because half an hour goes in very quick.
Mr Pogue: Right, impact as I have mentioned, steps taken by the retailers. The first one would be to ensure that a fair price is paid to the processors so that we in return as producers can get a fair price. We would like the promotion at all times of local product. We feel that the processors should supply adequate slaughter capacity here in Northern Ireland. There is a pig industry review on an all Ireland basis going on at the minute. Hopefully there will be a report quite soon from that and we would await the outcome of that review and then state what we would like to see in the processing line in Northern Ireland.
I think that the producers themselves can work together, possibly if we had more co-operation and between producer, processor and retailer we would be in a much better position to continue in the pig industry. I would ask this Committee, if at all possible now that pigs have got back into at least break even in some cases showing a bit of profit, to keep the banks from putting pressure on producers to clear their debt to allow them to get their maintenance back into shape again, get everything structurally sound to retain, as I have said before, a sustainable and viable pig industry for Northern Ireland.
The Chairman: Thank you very much. I have three short questions, probably they have been dealt with in the evidence that you have already given us, but we want it for the record because when we draw up our report we will have to have the record of what happened here in this public session and why we drew certain conclusions because of certain evidence which was given us. The first question is this: In previous evidence, the argument that producing high quality produce for premium markets is the only way to secure the future of our industry; do you agree with that assessment or not?
Mr Pogue: I agree, yes, that quality pig meat will sell and will provide us with a more stable industry in Northern Ireland. If we can work for quality that is what the producers will aim for and have been aiming for for a considerable time.
The Chairman: In a market like ours, is it not also true that perhaps the housewife is prepared to buy meat that is not up to the highest standard, but is indeed a good standard of meat?
Mr Pogue: There will be a market for that, but there is always sufficient, even if you strive for top performance you will always have stuff in the bottom layer to supply that market we feel.
The Chairman: Thank you, that's a very honest answer I must say. Some farmers wouldn't like that. Do you support the idea of farmers joining Quality Assured schemes and do you feel these are a necessary part of future marketing? If so, how can farmers be encouraged to get into these schemes because we are told that numbers currently participating are actually poor in their percentage?
Mr Pogue: I support Quality Assurance schemes, most farmers do, but the problem has been that we haven't been given the incentive to produce that quality. I think that we must have some incentive there to produce that quality and get the extra money that it costs us to put it up.
The Chairman: You are actually saying if they were more beneficial to the farmer more would participate in them?
Mr Pogue: No doubt. I mean the farmer will work if he is getting money in his pocket, there is no doubt about that.
The Chairman: Now we have heard from the Department of £400,000 to be made available for marketing in pig meat - I have to ask this question, I already know your answer - is that enough? How do you feel that this money towards marketing should be used?
Mr Pogue: A joint submission has been already been put to Government and I understand it has gone to Brussels for approval. Half of that money we have asked for to go towards the Forum for promotional activities. We know that we can't stress that it must be Ulster pork and bacon, that it is solely a generic promotion for pork and bacon. Part of the problem that I would see there is the 50% matching funding. Where do we get that in all cases that has been asked for? So if the Government gave us £400,000 the industry has to provide £400,000 as well for that. With the low number of pigs now and little income to the Forum, a lot less than there had been previously, that could be our difficulty. As well as that the PPDC, which, as I understand it, may be the only central testing station in the European Community - the only independent one and we feel honoured to have it here in Northern Ireland - has asked for some of the money for research for genetic improvement, as I mentioned before, to improve the quality of our pigs. I think that end will be financed where there is a statutory levy on producers to pay to the Forum. Producer groups, both farmer orientated and processor orientated, have asked for some of the money to assist them with marketing of their pigs rather than of pig meat. I think that as far as the farmer is concerned the marketing of pigs is as important as pig meat.
The Chairman: Thank you. Just one other point that you had given in your submission, you say the Republic of Ireland Government announced an aid package in February to compensate pig producers in the border counties for losses incurred as a result of the fire at the Lovell & Christmas plant - that package was to provide up to £12,000 per unit. You say that we should have a similar scheme in Northern Ireland. You know what the argument of the Department was, that because they gave some money to pig farmers to get rid of pigs in the market that that was the same type of scheme? Would you agree with this Committee, because this Committee took an opinion that that was nonsense, it wasn't comparing like with like?
Mr Pogue: Wholeheartedly. I think that scheme that the Government provided was very, very useful at the time. They provided it for the welfare of the pigs; it did not do an awful lot for the pig producer. We feel that being in the one marketing area with the three border counties supplying the same plants, the same factories, that they may have benefitted as much from that scheme as we did because it freed places in the processing plants. They have the added benefit now - and we don't think they shouldn't have got it, we believe they should have got it - but we would like to get it as well, something similar.
The Chairman: Thank you very much. Now some of our members want to come in. Gardner?
Mr Kane: Thanks Chair. Charlie, you have mentioned the need for some form of compensation for BSE charges. These charges are alleged to account for half of the losses pig producers were making in recent times; in your opinion is it realistic compensation? Assuming there will be none can the rules be used to any marketing advantage?
Mr Pogue: Yes, there is a marketing advantage, we think. Not feeding meat and bone meal to pigs, we would not want to go back to feeding that to livestock in Northern Ireland. We think there is a marketing advantage there. There is a judicial review, as I am sure you are aware, taking place in England; Meryl Ward has submitted a case for the British Pig Industry Support Group against the Government because of lack of compensation. They are awaiting the outcome of that quite soon on whether the Government were right or wrong on what they did. We would hope when the result of that comes out we may be eligible for compensation and we all live in hope.
The Chairman: That's the voice of the optimist.
Mr Paisley Jnr: First of all, do you agree with me that the way in which the stall and tether ban was implemented in the UK, in particular in Northern Ireland, it was an unmitigated disaster as far the as the industry was concerned? Do you not think as well as accelerating the decline in the industry it also exposes the fact that the whole philosophy lying behind quality, welfare, that that whole philosophy is misplaced because the consumer seems to be interested in one thing and that is price on shelf. Despite your best intentions to meet all those standards, those exacting standards, at the end of the day if the product is too dear the consumer ain't going to buy it. Therefore should you not be trying to get away from that philosophy on to a more surefooted market based philosophy?
Mr Pogue: Number one, I and many producers in Northern Ireland and, in fact, I would say in the UK, but more so in Northern Ireland, do not think that the ban on stalls especially was to benefit of the welfare of the animal. In fact, we think it was the other way - a pig in a stall was less abused than one put into loose housing and most of us who have changed over to loose housing would have found a difficulty in going back to that. In fact, when stalls were brought into being here in Northern Ireland 10/15 years ago we thought it was a Godsend to have them that way. We agree that the Government should not impose something on the producers here that is going to make that the production of anything more costly because the cheaper we can produce food, quality food, with reasonable welfare, the better.
Mr Rowe: If I might just add to that, that's the view of the Union, that this was not something that we should have done when the other states in the EU were not willing to go down it. Our competitors didn't go into it, but this Government laid down the law and being law abiding people the pig producers of Northern Ireland had to follow suit. There was no way at any time and we said this all along, that we should wait until the rest of Europe at least was doing it so that the competition would be level across Europe because I would have doubted if the rest of Europe will ever do it.
Mr Paisley Jnr: The general philosophy behind pushing for quality and pushing for welfare, is that misplaced then?
Mr Rowe: The general philosophy of pushing for welfare standards, quality, yes. But then the quality, removing stalls and tethers does not produce a better quality of pig, it gives you a more welfare friendly pig according to those, but as Charlie said it doesn't actually do the job, it is a mistake.
The Chairman: I'm sure you would agree with me a woman going to buy a piece of pork is not going to ask: Was that tethered or in a stall? It is absolutely ridiculous that should have been made and then to take us into this against everything that was running against it in Europe was adding fuel to the fire that was burning up our industry.
Mr Rowe: It showed a lack of understanding, Mr Chairman, in the decision making process of what actually goes on on the ground, both in the retail marketing of what drives the retailer and what is suitable for the production side of the industry as well.
Mr Bradley: Thank you Chairman. Can I say, Mr President, I share your view of a free fallen animal collection service so much so that I have written to the Minister this week with the EU regulations coming in in 2003 there will be no fallen animals buried on land, to investigate the system in France where it is a free service already.
You mentioned the lack of maintenance on farms; can you assess what the long term result of this would be and have you any hope that funds for capital investment will be made available by the Department?
Mr Pogue: It would be great if it could be. The Department haven't given us much help so far, but I think we should still keep lobbying to see if we could get something for structured funds like that. I think part of our problem may be the rules laid down in Brussels, but we would still like to think that we could get some help. Maybe there is the other case where saying we had to go out of stalls and tethers at a time when there was no money on farms and there was a very low ebb in the industry a lot of us made utility jobs for loose housing. And we feel now if the industry was back into the profit we may wish to do something which would be an improvement on what we have and would like to think that maybe grant aid could be brought to us to help us to do that. A lot was done just on a shoestring during 1999, at the end of 1998/1999 to keep within the law. If we had money there are other ways that they could be kept which would be better than what we have at the minute.
The Chairman: We have to move on.
Mr McHugh: Thank you, Mr Chairman. Firstly, can I congratulate Douglas as Chairman of the Ulster Farmers Union. We are both Fermanagh men, we have worked on this crisis in agriculture for quite some time now, I believe he has a good grasp of the difficulties. In relation to the funding that has been given by the package, the funding package, and in terms of the Government's commitments, the fact that they are leaving quite a lot of it off until next year before the farmers will gain anything from it, I would have great concern in relation to the point that was made of the 50% funding that has to come from the industry. That would be very, very difficult. What I'm saying is is there a possibility that we can lose that side of the £400,000 if the joint funding isn't able to be produced?
Mr Pogue: The £400,000, it was not part of the Summit announcement in March that was previously there and I think will be available quite soon. I would hope that the matched funding could be found, that is one difficulty I can see in it. If it is not found I would like to think that our Government would look sympathetically on the situation.
Mr McHugh: It is a very important part of their commitment in terms of marketing anyway. The other thing is: How do you see us getting to a point where we can avoid the peaks and troughs, especially the trough that we have found again which has been the history of the pig industry? We have to get to a point where the industry will be sustainable for the future in avoiding these troughs; is there anything in particular that can be done in terms of ourselves in relation to trying to make sure that it doesn't happen again?
Mr Pogue: Pigs have always been cyclical, peaks and troughs, I think that is market led. It has to be that way. I don't think we, in Northern Ireland, would favour quotas for sow number or anything like that, but I think what's going to restrict us in the future is the environment situation. The numbers that we have in Northern Ireland are so small in relation to what is there throughout Europe, and Europe is such a small place now that bears no significance, I feel, on the overall picture. I think that would double our numbers and would have very little effect on the total picture within Europe.
Mr Armstrong: Thank you Chairman. Would you agree with me that Government has a negative approach to agriculture and the pig industry and would more encourage diversification in other areas and then expect agriculture to pay for the diversification instead of the area that we go into and take the funding out of there? Also, the £5.26 per pig which is a BSE related issue, would that not be coming out of the budget for BSE related incidents? What way would you see that £5.26?
Mr Pogue: The first point there in relation to the Government's position on diversification, farmers in this country have been brought up to produce food to the best of their ability, they are not hoteliers or bed and breakfast people, and I feel that farmers should be kept going on the production end of food for the community.
BSE charges, we would like to think that some of those could be recouped. We understand, as I have said before, we don't want meat and bone meal back into the food stuff at all or into the food chain, we would be happy to do without that. We would like to think that other aspects of that like your offal disposal, fallen animals, everything related to that, assistance would come from the Government for that.
The Chairman: We will have to leave it there and come to the beef.
Mr Rowe: I have just two comments on that, fallen animals and that sort of thing are not, should be regarded as something, as disposal of meat-and-bone meal is regarded not just as a farming problem but as a human health problem and should be dealt with in the overall Government expenditure.
Just one other thing to come back to Gerry, I thank him for his good wishes, but he talked about the £400,000, that is for the marketing grant. There is another scheme as well for the health of pigs announced in the Summit on 30th March of £66 million over three years. When Nick Brown was here on whatever day, Tuesday, we did ask him and that he said that £26 [sic] million of this will soon be coming on-line now. The administration has to come and all the rest of it, he hopes it will be through Brussels in a few days time. We did ask him to look sympathetically at some regionalisation or relaxation of the rules towards Northern Ireland to put it at its simplest, Mr Chairman.
The Chairman: Thank you very much. We come to the beef. If you can make your submission as short as you can then we will have more time for the questions. I know you don't want to avoid questions. Some people getting at the table have a long preliminary because they don't want to hear questions, we know that is not so.
Mr Sharkey: I think you have got the paper, no doubt you have read it or will read it. I would just like to highlight a few points and leave as much time as possible for questions.
The main contributory factors to the whole beef crisis as we all know and we are all sick of hearing is the BSE issue. Basically what it has done to the market place in Northern Ireland, it took away our competition for cattle basically overnight, that has been the ruling factor since then. The other big problem is the currency exchange rate and it is a twofold prong. First of all, just like the pig sector, it is drawing in all the imported beef into the UK market and let's face it the UK market is the only market we have as our GB counterparts. So that market is being provided with a lot of cheaper beef, therefore making the differential with our prices against GB even greater than was normally the case. Indeed when we were exporting it was the opposite effect to that. I am pleased to say that of late the differential has narrowed somewhat but it is still a big issue and a very great concern to us. We would have to question the loyalty of some of the supermarkets, while very sympathetic to Northern Ireland and very loyal to purchasing our product we wonder if our prices were the same as the mainland, would the loyalty be as such.
Secondly, the currency element on our direct payments is a very big issue as well. As you appreciate our payments - I will speak a wee bit more about them later on - are in Euros therefore as well as the price reduction with imported product we have the big reduction in our direct payments, that is a twofold attack basically on our livelihood.
The cattle grading issue, we know a lot of people talk and there is a lot of discussion regarding that, we do realise that we must have a classification scheme within Europe. We must have and work towards the Europe grid. We believe and I strongly believe that the grading of cattle is not the main issue; it is the price that is paid for the various grades that is the issue. After all, the farmers are not particularly worried what grade is on the animal if he receives the same price or a fairly reasonable price. So that, we feel, is the main issue. I am pleased to say again, we have been working on this quite hard with the processors and we believe that maybe in the near future we will be able to get that price structure amended.
Can I move on quickly to what action we believe could be taken to help some of these problems? First of all the BSE low incidence, we know you are all very familiar with that particular case, could we just ask you to reinforce the case, basically what we want is a workable, simple scheme so that we can export carcass beef and live animals and bring competition back into the situation. So that is basically what we are asking for, all the pressure we can to have a simple workable scheme. The regulations regarding all our schemes and premiums and whatnot are very complex, indeed the form filling exercise now is a very big worry and burden to some of our small farmers. I mean, we have the ICAS forms, we have all the premium forms and the there is a lot of documentation regarding this, it has to be very accurate and indeed we feel as farmers that we have no room for error whatsoever. If we do make an error, be it whatever type, there are penalties involved. The farming community feels very aggrieved that the Department, as infallible as they are, do make mistakes and there are no penalties there. We feel the penalty system is much too great for simple errors.
As I mentioned the currency fluctuation, can I just come back and say one thing: We are part of Europe and we accept that, but if there is a mechanism in Europe for currency fluctuation, the agri-monetary system, we must have an undertaking by Government to fulfil their obligation there and pay that agri-monetary money. We believe strongly if this money had been drawn down and paid from the 1996 situation we certainly would never have been at the trough we were in because we all know a portion of money at the outset would have been a big benefit from saving us getting down so low. So we would like a firm commitment from Government that if this situation continues or increases or changes in the future that that mechanism is automatically there, that we don't have to go with a begging bowl begging for money rightly due to us.
Agenda 2000, there are some issues in Agenda 2000, we do realise it is mainly European guided, but we do realise there are a couple of items that the UK Government has discretionary regard. One of the main issues or two of them that were discussed this time last year was the 90 head limit to claim BSP premium on. And we prefer that this limit be abolished simply because we have to have an upper stocking limit which we do feel is quite an adequate limit. It is even more detrimental to the Northern Ireland farmer than his GB counterparts for the simple reason a Scottish producer, for instance, he can finish his animal, he is getting £50 to £60 more on the market place for it, on a cereal base system his feed is some £15 a ton cheaper so he is saving about £20. In other words, the Scottish producer would have the equivalent of one of our premiums over and above us. So this is why the Northern Ireland farmer cannot finish cattle successfully with one premium, he needs two premiums. The 90 head limit is there, obviously that is holding back our finishers from being able to achieve the second premium.
The other issue, just a quick one on the siphon of the transfers of quota, we have a 15% siphon from all quota transfers. We believe that is too high because that goes into the national reserve. We were never happy with the way the Department implemented the national reserve or distributed the national reserve so we believe the siphon should be reduced.
Promptness of payment of direct payments is another very grave issue to farmers and all basically we would be asking you for is to have a system where the dates are known and abided to that, when the 16th October comes, whenever payments are due, from that date onwards those payments will be prepared in advance, even could be put in the envelopes and could be made available to the farmer within that week or what not because each year this goes on. Each year there is a different reason why the payments are delayed, but it all results in the same thing - we, as farmers, have to finance overdrafts for those extra months each year. We want a specific date regime for payments, when we would expect them and keep to that date irrespective of the problems.
Could I just finish off very briefly, the relationship between processors and retailers we believe have been very detrimental to the farmers' share and just as Charlie said on the pig issue we believe the retail prices are adequate to give everyone a reasonable return within the sector, but unfortunately we are at the bottom of that structure. We believe strongly, and I think we have evidence to support, we do not get a fair share of the chain. So we are asking that we could have some transparency there and get our fair share. We believe retail prices could remain something similar.
Can I just finish off by saying we understand as producers we do need to cooperate better with one other, maybe that is something on the rural development front we believe more rural development money could go to agriculture to go to help us work together and strengthen our place in the market. So I will finish at that, gentlemen, and answer your questions.
The Chairman: Thank you very much. This low incidence BSE status for Northern Ireland as you know there is great discussion in Europe, at the moment it is all over how this beef goes out of Northern Ireland and how it is going to be labelled and so on. Have you men any views on that?
Mr Sharkey: Well the labelling issue is really a European issue at the moment on all the new labelling regime. Indeed it would be thought that when all the information that could or should be put on that the product would be no longer visible there is so much information. There are fors and against the labelling regime, it is difficult to say whether -- certainly if we had a Northern Ireland image it would probably be okay. Probably as a UK image of beef may not be as good throughout Europe, so there are pluses and minuses, but it is something that is happening in Europe and it is slightly separate from the low incidence issue.
The Chairman: But in the low incidence issue there's going to be a labeling that this came from Northern Ireland from a low incidence status. Then the argument from the Commissioner, whom I have talked to and who of course is a legal man, he sees it all the way from the legal man, he is a former Attorney General from the South, he feels that it leaves the way open for other meat to go in and pretend to have the status that this low incidence section of the European market has, because it is sort of a new departure, this low status incidence.
Mr Sharkey: I appreciate that. I'm not exactly sure what you mean.
The Chairman: I'm asking you what way do you think you can get your meat from a low incidence status area of Europe across Europe without giving opportunity for people in the smuggling racket to get stuff across the border, label it the same way and get it away?
Mr Rowe: Mr Chairman, all the other 14 countries in Europe, sorry 13 of the 15 are low incidence areas and they do not have this problem to any great degree. We therefore do not see this as a problem for us as a region. All right we are a region of a country that is regarded as high incidence BSE. The only place this could come into any problem is meat that has been brought in from UK from a high risk area into the low risk area for further processing. This can be safeguarded, we believe, quite adequately, by what's technically known as reverse XAP scheme. In other words it comes out of England, comes to dedicated plants or plant, processed under supervision which will be done anyway because we have a high degree of supervision in the plants anyway, and then it is put back on the lorry and sent back to England. Whereas meat that comes from Northern Ireland, it will be coming from different plants, it can go to the market anywhere in the world hopefully after low BSE incidence status. Technically this should be able to be overcome without a great deal of bother. Now, I say technically, I see it as that way, that is what we are looking for, we have 15 member states to convince, and we have got to get the thing set up correctly. So there are a lot of hurdles to go over, but it is not impossible. And I believe that David Byrne at least knows it can be done if the will is there. It is making sure that the will is there, not only with him, but with SEAC, the committee who look after it and the 15 member states.
The Chairman: It would be a terrible thing if because of legal technicalities and (inaudible) Minister we did not get it. I think that there are interests in Europe who do not want us to get it, that's the first thing, there is opposition to it. That being so, we must be able to say there is a scheme like the scheme that you are talking about which seems to be quite simple and you are not really adding to what has already been done. If we could get that and I think that we need to be lobbying in Europe along that line because what I'm getting out of Europe is that it is too difficult, we would love to do it. I mean we were told by Nick Brown there was going to be no quick fix in this anyway, it was going to be a long time. I'm not so sure about what the Department here is doing, I'm not so sure because we had a document before them when they said they were definitely - they only looked at it this morning - they were definitely supporting it, but they weren't saying it was their target. I put them over it today. So I think that we need now to get all the strength of agriculture on that one particular subject so that we don't fall by the wayside.
Mr Rowe: Mr Chairman, we, as a union, totally agree with you. It is one of the biggest improvements that we see not alone, it may not be the biggest in financial improvement in agriculture, but it will be one of the biggest boosts for morale not only for agriculture but for Northern Ireland. I believe it will also be a big boost for moral for the rest of the UK, because it will show them that it can be done , that there is a way out of this position and that we are not producing, for want of a better expression which is not very good, a dirty product or contaminated product, but I believe it can be done. We will endeavour and are endeavouring in every corner we can to do what we can for it.
The Chairman: We might need the agriculture interests ourselves to maybe go directly to Europe because I'm worried that this is going to fall by default because they are all the things that are said to me. I talked myself with Byrne, of course he is sympathetic I mean I confirmed that he is sympathetic because he says "I am in a position where I'm easily got at" because people are saying he is the Attorney General in the south of Ireland, he is not interested in getting anything for Northern Ireland. I said I quite understand that, he is sympathetic. At the beginning of this they were talking about impossible standards that they wanted to go through with which would be so expensive that, at the end of day, we were not getting a free market into Europe. So I think we might have to develop more a strength because I sort of thought that Nick Brown was putting off the awful day, I might have taken him up wrong, he wasn't saying that it was definitely coming. He said they are working on it. Now the officials are working on it. Sometimes I'm a bit afraid when officials get into the matter, especially European officials. At the end of day there is not much left so I think that we need to keep that in mind.
The members want to ask you some questions.
Mr Ford: Thank you Chair, I'm going to concentrate on your proposal and what action can be taken to overcome the crisis. I think it's very interesting reading down the number of things we have already said, but unfortunately also the things like agri-monetary compensation which are rather beyond our abilities to have much influence on the current policy of the MAFF Minister. Although I think this direct payment is something which we could take up rather further with DARD. Can we just follow through your point about low incidence BSE because that seems to be a crucial issue at the present stage; the Chairman has already hinted at it, do you believe the will is there within MAFF, official and Ministerial level to push forward our case as strongly as it should be pushed forward?
Mr Sharkey: I appreciate we are dealing with our own Department and in Dundonald House they in turn work through MAFF, I suppose the best hope is that MAFF is on our side. It is a sort of a three pronged attack. We work through the Department, they go through MAFF so, as the Chairman rightly says, there is a lot of change working there and if we could have a more direct involvement with Europe that could be useful to cut out of some of that because the message can get watered down, as it were, when it goes through three different bodies, but we are reasonably assured that our Department along with MAFF are on board and do want to deliver on this.
Mr Rowe: David, can I answer that question? I was at a meeting with Nick Brown on Tuesday, he came out at that meeting with us very strongly in support of it. He said that he would do everything and make sure that his staff did everything possible to deliver. Now he didn't come with a bit of paper in his hand saying: Here you are boys, export. But that was what he told us in that meeting.
The Chairman: He told us that too, but then he was questioned when, when we came to the time factor, then we were running into difficulties.
Mr Ford: I think, Chairman, we have got to continue with "shortly" is the answer to any question in relation to the time. In the meantime the issue about the build up of the Northern Ireland market within GB multiples for selling beef, your paper seems to be slightly confused, there is no justification for the differences in price and yet if we didn't have those differences in price we wouldn't be selling them to the GB supermarkets. Is there any prospect for any improvement in the marketing arrangements within GB on the presumption that we are not going to get low incidence BSE status tomorrow?
Mr Sharkey: Well of recent times the price differential has narrowed for various reasons possibly. But we believe that the only time that our prices will come on par with GB is when we have competition and that will be as a result of exporting. I don't foresee us ever getting to a situation that will be equal to the GB prices without the ability to export or bring competition into the market.
The Chairman: I need to bring you in now.
Mr Douglas: Thanks Chairman, thanks for your presentation. If you just highlight the fact that farmers are the only ones I think who are not allowed to make mistakes. I think that is important and something that needs to be driven home. Your paper mentions a lack of competition which exists, can you tell us how you feel more competition would benefit the farmer and how can more competition be introduced?
Mr Sharkey: Well I think you just touched on that. How it can be introduced is basically with more people in the market place, which is people buying to export or indeed live exports to some parts would bring more competition into it. The second question?
Mr Douglas: I was just wondering how more competition could be introduced, I mean you are talking really about the live markets here.
Mr Sharkey: The benefit of it? We all know in any free market or even any auction place one only pays what you have to pay to purchase something. So I mean if somebody else is prepared to pay more you pay more. That again is back to the thing of competition that meat processors in Northern Ireland will pay what they have to pay basically to buy a product from us, but if there is somebody out there prepared to pay more they are quite happy to pay more, so competition is the word.
Mr Kane: Ken, with reference to the livestock grading, farmers are under the opinion that stocks are being downgraded at abattoirs, they are not too happy with the LMC operation in general. They also believe that there is a cartel being operated within the LMC, the meat exporters, abattoirs, meat processors and retailers. I personally feel if this is the case an urgent investigation should take place for the benefit of the producer and the meat industry. I have also experienced LMC staff making drastic errors in grading, I can assure you it doesn't go down well. Where do farmers stand in this respect and what initiative can they take, Ken?
Mr Sharkey: Well grading has been an issue, a hot potato issue all down the years that I have been involved. I suppose the most up to date position on it is that LMC are now looking at the possibility and you know there has been some work done on the machines for looking at carcases and what not. I think that would probably be the way, it is probably a few years away as yet. So that will take the human element as it were, or some of the human element, out of grading. The question of whether LMC is fair or unfair at grading, when you do look at LMC and we did a review of LMC activities, there are not a whole lot of people wanting canto do grading or do classification in Northern Ireland. We as a union believe that LMC are still, if not perfect, are still the best body probably to look after that. There are fluctuations in grading. Human beings as they are have different opinions and different views so you do have some fluctuations. The last year or so we believe it has been more stable than prior to that. I still go back to the point why farmers are so unhappy with the grading is because of the price linkage to the grade. That is why he is so detrimental to the grading because it reflects the price he receives. We believe if the price structure was such that two or three grades made the same price then he wouldn't be as anxious which of those three grades his animal got and it probably wouldn't be as big a hot potato. We believe the machine route, automatic route will come and will take some of the human error out of it and that couldn't come probably too soon for that, but the price differential, the price structure is the main issue we feel.
Mr Kane: I'm sorry, I would have to disagree on your comment about LMC, but that is neither here nor there. Thank you Chair.
Mr Paisley Jnr: I think the union should be congratulated coming up with the low incidence BSE status initiative. I hope that it does go through with some success, it is one of your babies, that has to be acknowledged. But in part of your submission, Mr Sharkey, your oral submission, you said that there appears to be enough money in the market in terms of profit, it is just the percentage share out of that profit between the producer, the middle man and the retailer, it prompts the question: Who is screwing who here? You know, one of the things following on from that, if you can answer that, I have my suspicions who is screwing who here, following on from that has the UFU considered seriously addressing the issue of setting up co-operatives to cut out the middle man in all of this and make the farmer not only the main producer but also the man who sets the price?
Mr Sharkey: Well the question of who is screwing who goes on. All we know we are at the bottom of the chain and the processors and retailers, everybody gets a margin out of our profit, it obviously comes out of our little pot as it were so we are at the bottom. Whether it is the processors or retailers that is a very debateable point and one can argue all various ways because we would have a view that probably both are sharing in that situation.
The Chairman: Isn't it a fact that all these other people are doing well at the present time and the farmer is doing badly. We had all these people around the table, none of them are committing suicide, none of them are driving a poor car, none of them are doing anything, they are all doing well. But the farmer who is the primary producer he is doing very very badly.
Mr Sharkey: That is quite correct. It is a known fact that we as farmers have been taken to the cleaners as it were over the last three or four years, but it goes back to the old position, I mean, what can we do, how do we force them to pay us more and nothing would force them to this competition, that's the only thing that will force them or change the situation. We are all human beings and who is to say I wouldn't do things that much different, but you must get a mechanism.
The Chairman: We must move round the table.
Mr McHugh: Thank you Chairman, in relation to committing suicide the only way that some of them might is if they are asked here often enough.
In relation to the question of paper work, farmers are overrun by paper work at the minute. If you take a look at teaching at the present time teachers are no longer teaching, they are spending almost half their time in the business of paper work and they are under the very same pressures as farming, they have become very frustrated not to be able to do their job and it is affecting the whole thing. In terms of the other thing is that DARD are the people that negotiate more and more paperwork on behalf of the farmer and more regulations, some of it and quite a lot of it, I think could be done without. I asked Nick Brown the other day that we met him down in the Stormont Hotel, I asked him was there anything he could do in terms of putting some system in place such as tribunals or appeals system in order to address the situation where farmers who make unintentional errors have somewhere to go. I just wonder at the amount of money that is lost in terms of payments in terms of the community with 300 plus farmers each year being penalised and penalised very heavily at a time when they haven't any money at all. That is a very, very severe system which is not in any part of our outside industry.
Mr Sharkey: I'm not sure of the exact figure. We have our own technical people working on these queries, a lot of them are resolved but it takes a lot of time, effort and money to do. Yes, if there was some mechanism that these errors could be easily rectified or at least get a fair hearing towards them that would be very useful.
Mr McHugh: I find there is no hearing for farmers, that is my response from the Department, a brick wall.
Mr Rowe: I must say we have a technical team in the Union who will take members or people's cases forward and we find that we do get a fair degree of results so we do. Not as many results as we would like, not as handy as we would like, but we do get a fair result.
The Chairman: President, the trouble is the present day men were depending on money to be paid promptly, some of them got promises. A case recently where I have a letter saying it would be paid on a certain day then they never paid it for nearly three months and argued about the man didn't fill his form right. It was only when I intervened and made an issue of it the man got his money, but he was three months out, the bank manager was pushing him for he had said: "I have £8,000 coming to me" and the bank manager took him at his word. It didn't come, it threw him all astray.
Mr Rowe: Chairman, you are looking at a man the same thing happened with. When somebody calls with an error and says: "I have a problem, we have a team who look into the problem".
The Chairman: Right.
Mr Armstrong: I will just ask half the question.
The Chairman: One question.
Mr Armstrong: Would you support the idea if farmers joined quality assured schemes and do you feel that these are a necessary part of future marketing and with quality assured would it be one way that we can see that the incidence of BSE would be eliminated and that we have give people the idea that BSE is not a problem in Northern Ireland?
The Chairman: That isn't one question, it's actually two questions.
Mr Sharkey: The quality assurance scheme in the beef sector has been running very successfully from the early 90's. We believe that prior BSE that it was a big influence, a big factor in getting into markets so we do believe it is necessary to have a farm quality assured scheme. What we don't agree with is and we touched on it earlier in getting members in the farm quality assurance scheme and to get people to join or to support it there has to be a differential between a farm quality assured animal and a non-farm quality assured animal. I think it has been the downfall scheme of late, the differential hasn't been always there. We do understand that the market place does require farm quality assured animals and will pay more for them against non-farm quality assured, so we would support it, yes, we believe it is necessary.
The Chairman: We will leave it there gentlemen. Mr President and your colleagues and your back up team, thank you very much for coming. Thank you for the information you have given to us. It will certainly be helpful when we draw up our report.
Mr Rowe: Mr Chairman, can I thank you for having us and just as a word of closing that other things may need to be watched in the world out there is if our supply chain, for example or feeding chain contracts into fewer hands it may be detrimental to us because there will be less competition. It is the same thing if those who are buying our product in any circumstance are reduced in number competition reduces and I would like the Committee to remember when they look at the general news and things that this does have an effect on us. Thank you very much gentlemen.
30 June 2000 (part ii) / Menu / 30 June 2000 (part iii)