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Appendix 2

Minutes of Evidence

LIST OF WITNESSES WHO GAVE EVIDENCE TO THE COMMITTEE

EVIDENCE TAKEN ON FRIDAY 6 APRIL 2001 Evidence
Paragraph

Ulster Farmers' Union 1

Mr D Rowe - President

Mr K Sharkey - Chairman-Cattle and Sheep Committee

Mr I Stevenson - Secretary-Cattle and Sheep Committee

Northern Ireland Agricultural Producers' Association 131

Mr N McLaughlin - Vice-Chairman

Mr V Boyle - Vice-Chairman

Mr O Cunningham - Co. Down Chairman

EVIDENCE TAKEN ON FRIDAY 27 APRIL 2001

Department of Agriculture and Rural Development 217

Ms B Rodgers - Minister for Agriculture and Rural Development

Mr L McKibben - DARD official

Mr G McCracken - DARD official

Livestock and Meat Commission 287

Mr D Rutledge - Chief Executive

Mr G Lowe - Chairman

Mr C Duffy - Board Member

Mr M McCoy - Board Member

Mr I Mark - Board Member

EVIDENCE TAKEN ON FRIDAY 4 MAY 2001

Northern Ireland Meat Exporters' Association 414

Mr C Mathers - Chief Executive

Mr C Duffy - Chairman

Mr R Moore - Vice- Chairman

Mr C Tweedie - Past Chairman

EVIDENCE TAKEN ON FRIDAY 11 MAY 2001

National Beef Association 546

Mr H Marquess - N.I. Chairman

Mr J Carson - Vice-Chairman

Mr T O'Brien - Vice-Chairman

National Sheep Association 637

Mr I Gibson - N.I. Chairman

Mr E Adamson - Secretary

Mr S Wharry - Treasurer

 

 

MINUTES OF EVIDENCE

Friday 6 April 2001

Members present:

Rev Dr Ian Paisley (Chairperson)

Mr Savage (Deputy Chairperson)

Mr Armstrong

Mr Bradley

Mr Dallat

Mr Douglas

Mr Ford

Mr Kane

Mr McHugh

Mr Molloy

Mr Paisley Jnr

Witnesses:

Mr D Rowe )

Mr K Sharkey ) Ulster Farmers' Union

Mr I Stevenson )

1.

The Chairperson: Thank you gentlemen for coming. This is the first part of our inquiry and we want to deal with it as expeditiously as we can.

2.

Mr Rowe: I thank the Committee for what it is doing for the agriculture industry in Northern Ireland in its role as scrutineer. It is good that the Committee is here to scrutinise and question what all of us - the Department, the Minister and us - are doing. We can all go off the rails at time; no one is beyond that. The recent past has been tiring for all of us. There have been many problems. We have had to work longer hours than we thought we would when we were elected, but, at least, we seem to be coming to the end of our current problems. There appears to be some light at the end of the tunnel.

3.

With me today is Mr Kenneth Sharkey, chairman of our cattle and sheep committee. He will cover most of what we want to say. We also have Mr Ian Stevenson from headquarters, who is secretary to the cattle and sheep committee. I shall let them do the talking: why work when you have slaves? There is no point in being elected to office if you cannot delegate responsibility. That is the privilege of being president.

4.

The marketing of livestock in the North of Ireland, to the best possible advantage of the farmers and economy, is a matter dear to everyone's heart. The Livestock and Meat Commission (LMC) is an integral part of the industry. It is a semi-public body, and we can afford to take a look at what it does. If, at the end, there are any other problems not relating to the LMC that you want to raise with us, we will be happy to discuss them, if time permits.

5.

Mr Sharkey: I shall deal with the four questions in your letter. We have submitted a lengthy response on the review of the LMC to the Department, and the Committee will have seen that response. Many of the questions are answered in it.

6.

The first question was on the funding of the Livestock and Meat Commission. Until July 2000, the LMC was funded primarily by producer levy. In July 2000, after discussions with the LMC and ourselves, the processors agreed to pay a levy to the LMC. That levy was equivalent to the producer's levy and was approximately £1 from the producer and approximately £1 from the processor for each finished animal. That is the source of the LMC's revenue.

7.

In the letter, the Committee asked whether we could be sure that the levy paid by the processor would not be passed back to the primary producer. We cannot be sure of that. The only income for a meat processor in Northern Ireland is farmers' money; the only revenue that they receive is from slaughtering and processing farmers' animals. We could argue that we are also paying their water bills, rates and wages. We believe that their coming on board and paying a levy is beneficial.

8.

Classification is, undoubtedly, the biggest issue at all producers' meetings and in all conversations with processors and producers. We should remember that the LMC does not set the standard of classification. The LMC carries out classification work, but is supervised by the Department of Agriculture and Rural Development, which sets standards to meet EU regulations. If there is variation in classification, the Department of Agriculture and Rural Development monitors the work and should pick it up at the outset.

9.

As classification is such a controversial topic, the LMC would get rid of it tomorrow if it could. It is not a profit-making exercise, and it has given the LMC a lot of bad publicity. However, we must have classification as stated in EU regulations. In our meetings with farmers from throughout Northern Ireland, we find that the most dissatisfied producers are those who slaughter animals only occasionally. Those who slaughter animals regularly are most satisfied, because they are more skilled at selecting stock, feeding stock to the desired finish and slaughtering at the correct stage. One of our major producers, who kills cattle regularly, said that he had never heard of an animal changing its classification between the time that it left home and its arrival at the factory; that is another issue.

10.

We were also asked about how we compare with Great Britain and the Republic of Ireland. That is always a bone of contention. Some of our producers have slaughtered cattle on the mainland. Some have said that classification there was better suited to producers; others said that it was more severe there and that it was better here. The processors are in the same situation: some say that the standard is tighter there, and some say that it is easier. The conclusion is that any system in which human beings are involved will have some variation. There is variation in the system, and we must accept that. We have been reasonably satisfied in the past year or 18 months that classification has been reasonable. About 18 months to two years ago, there was an EU inspection and, undoubtedly, there was a tightening of standards at that time - not by the LMC but by the Department of Agriculture and Rural Development. The Department tightened the standards, and the LMC had to administer them.

11.

Some work has been done in the Republic of Ireland on objective mechanical methods of grading. It was a fairly large operation, partly funded by the EU. The results were interesting, but we feel that it is probably too early to introduce such machines in Northern Ireland; producers would be disappointed and would complain bitterly. The machines are designed for EU countries that produce a lot of bull beef, and they have great difficulty dealing with the fatter type of animal that we produce. Unless further work is done on the machines, it would not be to the producers' advantage to implement them.

12.

There was a question about whether the commission's promotion activities were good value for money. That is a difficult thing to assess. People have complained about the promotion of lamb in Northern Ireland, but the LMC receives only a small amount of money for that. Many of our lambs are exported live to the Republic of Ireland for slaughter, and only about 400,000 lambs are slaughtered in Northern Ireland. At 10p per lamb, the commission receives about £40,000 per year, which does not help much with promotion. Such a sum would barely pay for more than one full-time member of staff. Indeed, the commission is working to promote lamb on a restricted budget. There is more money available for meat.

13.

It is difficult to say whether promotions are more beneficial to processors or producers. As producers, we believe that opening up any market is good for us. The LMC is not directly involved in arranging prices with customers and producers, but if it introduces a processor to a specific market, we are at the processor's mercy as regards the price that he feels is reasonable. We accept, however, that promotion must include the processor and the producer. If the processor does not have a market, we do not have a market. If we have a market, we need a processor to process the produce.

14.

More could be done. Until recently, all the activities of the LMC have been paid for by the producer and, to some extent, the processor. It is a limited amount of money, in comparison with that paid to the Meat and Livestock Commission (MLC) on the mainland. The MLC's levy per animal is about £4 per head, giving it four times the money in the kitty that the LMC in Northern Ireland has.

15.

Over the years, there have been complaints that farmers were not represented properly on the LMC board. We agree that there should be three or four farmers on the board. We realise that if there were nine farmers sitting on the board, the promoting activities for beef would not be very successful. We farmers accept that we are poor promoters. We would like to have a good input into the LMC and its activities, but we realise that there must be outside expertise on the board to help with the promotion of the industry. We would be happy enough with eight or nine members, but we would not want the board to grow massively.

16.

I have worked closely with the LMC and have attended many meetings about its activities. I am reasonably satisfied with its work.

17.

The Chairperson: As constituency representatives, we hear many complaints about the classification service. There seems to be too much subjectivity in the classification. All members of the Committee mentioned that point when we decided to start the inquiry. If only one man makes the decision, that is very subjective. I do not know how we deal with that. I appreciate that it is a difficult issue, but the point has been made strongly to us that people feel that some animals are appraised more fairly than others.

18.

I note the point that people who regularly take cattle to slaughter seem to be less worried than those who turn up only occasionally; perhaps, the fellow knows them.

19.

Mr Sharkey: I would take a different view on that. Somebody who kills cattle every week selects his cattle better. It is the same with lambs. Someone who is killing lambs every week can select lambs much better because he is used to handling them.

20.

Farmers would not complain so much about classification if it were not closely linked to the payment structure. A farmer is not too worried whether an animal is classed as R3 or R4L if he gets the same price for it. Therefore, the problem is not classification; it is the payment structure. We have negotiated with processors over the years to get the payment structure changed. If we could have a meaningful change in the pricing structure, classification problems would quickly disappear.

21.

Mr Rowe: Classification is grand for the identification of a type of animal or the payment that that animal is worth. In 1998, just after I got this job, the LMC did a piece of work for the union that showed that the variation between some of the grades was only 1%, although the cut in price was 6p. The pricing structure has been there from the time of intervention. Intervention has now gone, and we should consider the pricing structure, rather than the grading structure, perhaps.

22.

The Chairperson: Is the classification the basis of the pricing structure?

23.

Mr Rowe: Yes, although the position is not exactly the same in other parts of the UK and in the Republic of Ireland, where it moves on a different scale. Here, the 6p per grade difference is mandatory. The union managed to get O+3s brought up a grade, and that was worth about £600,000 to farmers. It took a lot of effort and a lot of meetings; Kenneth Sharkey and I did the legwork. More changes of that kind could help.

24.

Mechanical grading, as Mr Sharkey said, has yet to be fully developed. However, there has been an interesting development in Australia, where meat is sold on taste, not on grade. The consumer does not know when he sits down to eat roast beef, steak or mince whether the animal was R3 or O+4L, a Friesian bullock or a Charolais bullock. If it tastes good, he will come back for more; if it does not taste good, he will buy pork or chicken the next time. I have talked to members of the Australian board on two occasions. They gave three of us, including our pigs chairman, a run through their work. It was very interesting, and people in Northern Ireland will want to follow up on it. We can sell on taste. Nobody sees whether the animal is black and white or what the grade is, but if it tastes good, people will come back for more.

25.

Mr Dallat: There would be a lot if interest in the job of taster.

26.

Mr Sharkey: A conference on selling on taste and eating quality has been postponed because of the foot-and-mouth outbreak. Members of the Committee will be invited to attend when it has been rescheduled.

27.

The Chairperson: The classification is meaningless to the buyer. The housewife buying meat in the store would not know anything about it.

28.

Mr Rowe: It is meaningless to the housewife, but the supermarkets, in particular, use it to buy meat. They are strict about what they buy - U3, R3, and 10% O+3, say - and, if they get more than 10% O+3, they fine us.

29.

Mr Sharkey: Grading gives an indication as to the yield of meat.

30.

Mr Paisley Jnr: That affects the price that the consumer pays. The supermarkets buy at that grade so that they can say that they are selling the best quality meat.

31.

Mr Sharkey: To some degree.

32.

The Chairperson: I must remind everyone that we are all on the record. The Hansard report of proceedings will be sent to you for your information.

33.

How would the taste idea be developed?

34.

Mr Stevenson: It is quite complicated. Variables are used to define the type of meat and its quality for frying, stir-frying or oven cooking. Meat is graded according to three different categories. It could be steak meat or meat from poorer quality cuts, but it is all defined according to eating quality. That is the new system that is being talked about, and there will be a meeting to discuss it in the near future.

35.

The Chairperson: When I was a lad, there was good frying meat, which does not seem to be on the market today at all. That frying meat was delicious and was one of the culinary basics in the ordinary person's home. Rich people might have opted for other cuts of meat, but the ordinary person bought good frying meat, which tasted great. I suppose that that had to do with the feeding of the animal.

36.

Mr Sharkey: It is fairly complicated. There are many factors in the grading, such as age, sex and breed. The advantage is that there would be only three types of meat on sale. Some of the cuts that we sell at a lower price are from good eating quality meat and would reach a much better price. That would be an advantage.

37.

The Chairperson: We would be anxious to have further information on that interesting point. We have had many representations on the matter of classification.

38.

The union has already submitted a paper as part of the five-year review being undertaken by officials from the Department of Agriculture and Rural Development and the Livestock and Meat Commission. Have you had any response to that paper?

39.

Mr Stevenson: We forwarded a copy of our submission to the review to this Committee because it also answered most of the questions that the Committee had asked. We have had no further feedback from the Department of Agriculture and Rural Development.

40.

The Chairperson: When will you have the Department's response? It would be useful to know its reaction to the union's submission.

41.

Mr Sharkey: It was to be published some time ago.

42.

Mr Rowe: This is a five-year review, but we reckon that the answers will come back in ten years. It will cover the period to 2005.

43.

The Chairperson: It would help the Committee if you were to enquire when the response from the Department of Agriculture might be available. That would allow us to deal with any matters that arose.

44.

Mr Douglas: The farmer is more concerned with what he receives for his animal than with the grading, so it is important that something be done to the pricing structure. I live exactly half way between Foyle Meats Ltd and WD Meats Ltd, so we can decide where to take our stock. One of our neighbours is a good beef producer, and he split his cattle, sending some to Foyle Meats Ltd and some to WD Meats Ltd. On the day, there was a big variation in grading, and I am in no doubt that differences occur. My neighbour did not pick out the cattle specially - all his cattle are fairly good. There is definitely a problem there. It would be fine if we could do away with the grading system and devise a better pricing structure.

45.

Mr Sharkey: We accept that there is some variation from day to day and from grade to grade. We are human beings, and such things will happen. That situation will not improve much until there is a different system. Moving responsibility to another organisation will not eliminate those differentials.

46.

Mr Douglas: My neighbour sent cattle to that abattoir over a period of time and it changed over that period. Sometimes he went back to the other one and received better prices. That must be dealt with.

47.

Mr Paisley Jnr: We talked about a mechanical grading scheme. In the poultry industry, Moy Park Ltd uses a photographic grading scheme that grades birds in a split second. Can that be done with other livestock?

48.

Mr Sharkey: Yes. The mechanical grading system that we talked about uses that type of machine. They were designed for mainland Europe, where a lot of lean bull beef is processed, and they can assess the meat yield of the carcass with reasonable accuracy. The fatter carcasses that we deal with tend to throw the machines off and reduce their accuracy. The purpose of the mechanical system is to calculate the yield of meat on a carcass - be it 58% meat yield or 60%. That is the big advantage; farmers are paid according to the amount of meat produced by the animal.

49.

Mr Paisley Jnr: Do the benefits of the Livestock and Meat Commission's classification scheme go to producers, processors or consumers?

50.

Mr Sharkey: It is not in the interests of the LMC to make the grading system advantageous to producers or processors; it does not set the standard. The person who awards the grade on the day is supervised by officials from the Department of Agriculture and Rural Development, and he must answer to them if he awards the wrong grade. The Department of Agriculture and Rural Development monitors the standard. It is of no benefit to the LMC to make the system fluctuate one way or another. Our understanding with the LMC is that the producer is given the benefit of the doubt if there is any debate.

51.

Mr Rowe: The Livestock and Meat Commission's standards are monitored by the Department of Agriculture and Rural Development. The figures were about 7% off the mark when they were last assessed - I am almost certain that it was 7% - and it was all found to be to the advantage of the producer, not the processor. Who gets the benefit at the end of the day is a subject for debate.

52.

Mr Savage: Is the time coming when factory buyers will come into the yard or the pen and simply offer so much money per kilo? I do not think that that situation is far away; buyers have been doing that over the previous couple of weeks. There is no point in the farmer complaining after the animal has left the yard. A farmer will know how much he is getting per litre for his milk before it leaves the yard; it seems right that he should also know how much he is getting per kilo for his beef.

53.

I would agree that, sometimes, there is as much difference between graders as there is between day and night. A Department official told the Committee a few weeks ago that what he would judge with his eye would be different to what we might judge with ours. Ultimately, the farmer is the fall guy. The difference in grading can mean as much as 10p per kilo, and that is not on.

54.

Because of the extra grades on beef in Northern Ireland, a farmer can put his cattle on a lorry and take them to Scotland, and, after all the expenses are taken into account, he will still be £40 per head better off by doing that. Surely, that is wrong. Whose fault is that? Is it the Livestock and Meat Commission's? I do not want to fall out with them. Nevertheless, the farmer is entitled to a fair share for what he produces; he is not getting that.

55.

Mr Sharkey: We do not have a problem with factories buying cattle in the yard at a price. However, persuading them to do that is a problem.

56.

Mr Savage: They have been doing that in the past week or two.

57.

Mr Sharkey: We accept that, at times, it might be worthwhile to take cattle to Scotland. However, if there is always such a big differential, why are larger numbers of Northern Ireland cattle not taken across?

58.

Mr Savage: That is open to question.

59.

The Chairperson: I failed to give members of the Committee the opportunity to declare an interest. Anyone with an interest should raise his or her hand.

60.

The classification system is hurting farmers. That matter is raised with me everywhere I go. The system is subjective; what does a man see when he looks at cattle? People who take cattle in regularly might not feel that the system is too bad, but a man who does not come so regularly might feel that it is poor. Do people work on the basis that they have dealt with a man's cattle before and knows what they are. I do not understand - perhaps you could explain - how the official from the Department of Agriculture and Rural Development can judge on the matter.

61.

Mr Rowe: I will answer the first part of your question. Usually, the men who come in every week with cattle buy stock. They buy their stores and feed them up. Many of them buy their stores to a standard; for example, they might want a bullock that will die when it is in category R3. They buy them that way.

62.

I breed cows and calves and kill some of those calves. I must take what the cow gave me to the factory. I sent in a trailer-load of cattle - six animals at a time - two weeks ago. I thought that they were O+ or better, but one of them was graded as an ordinary O. Given the problems with foot-and-mouth disease, by the time that I got my paper back from the grading, there was no point in appealing it. At that stage, the animal had probably been eaten, although it probably did not taste too good, for it would not have had long enough to hang. That is the difference. Sometimes, those of us who are feeding our own stock have to sell. We might put six animals in the trailer, five of which are good, fit cattle. The expenses are the same for five as for six, so we put the sixth one on and end up getting a dog of a grade. I got £374 for a bullock for which I had expected to get £474. If I had been there, I would have pushed for a better grade.

63.

Mr Paisley Jnr: Does it ever go the other way?

64.

Mr Rowe: Yes, sometimes prices go down.

65.

Mr Paisley Jnr: Would you sometimes get more money for a beast than you expected?

66.

Mr Rowe: Yes. I got £585 for a couple of beasts in that load; I did not think that I would get quite as much for them. At the end of the day, I was a wee bit lighter than I thought, but not much. That is how the difference comes in. I do not think that it is collusion as such; it happens because the farmer who comes in regularly does the job better.

67.

The Chairperson: What measurement does the official from the Department of Agriculture and Rural Development make?

68.

Mr Sharkey: He makes an eye judgement as well.

69.

Mr Rowe: He goes through the chills every so often to check the day's work.

70.

Mr Armstrong: We know that we have a lot of grades and that there are many variations in prices. I do not mind how many grades there are, as long as the price is good enough. Is there too much variation in price? Would it not be better to have a simpler pricing structure?

71.

Mr Rowe: I would not like to add up the time that Mr Sharkey and I have spent since August 1998 going round the meat exporters pushing that point of view. In February 1998, there was a change in the grading; EU officials came over and tightened things up. We maintained that the cattle had not changed, just the grading. We would like to enlist the help of the Committee in exerting pressure to have the number of payment bands reduced. We have had some success in moving the grades around, but not as much success as we would like.

72.

The Chairperson: Our beef report recommended that there should be fewer bands, but it was not heeded.

73.

Mr Sharkey: We could lose a lot of time discussing classification. Classification is not a problem - the payment structure is the problem. If we could get the processors to pay more fairly, the classification problems would disappear.

74.

Mr Rowe: The Committee's report was obviously not read or heeded. It may take some pressure from the people who now have power to make people consider the issue again and do things differently.

75.

Mr Armstrong: We know that every penny that goes to the LMC comes from the proceeds of the sale of animals. Should there not be funding from some other source?

76.

Mr Sharkey: We believe that there should be lots of funding given to the LMC to promote beef. The Industrial Development Board receives a large amount of money to promote job creation. The LMC receives some promotional money from Europe, but the sums are nominal. Any source of revenue for promoting beef, lamb or our produce would be welcome.

77.

Mr Armstrong: Any resources that would take the extra expense from the sale of beasts would help.

78.

Mr Kane: I want to ask about aitchbone hanging. Does the Ulster Farmers' Union feel that cattle carcasses should not be hung in that form until producers have been made aware of - and have accepted - the grade?

79.

Mr Sharkey: Aitchbone hanging is a problem, as far as appeals are concerned. It is stipulated by purchasers that the animals be aitchbone hung immediately. It is difficult to tell people who are buying your product that you will not provide it in the way that they want it. We all know the power of the supermarkets, and that is their request. It creates a problem with appeals.

80.

Mr Kane: Is it possible to develop a branding system to complement the farm quality assurance scheme (FQAS)? How can more applicants be attracted to the FQAS if the Livestock and Meat Commission raises the cost to producers? What are the odds that levy costs will not be passed back to the producer? Is there a need to enforce FQA standards of production in all European Union States?

81.

Mr Sharkey: I have spent a great deal of time in the past six or nine months on farm quality assurance. We are in the process of accrediting our FQAS to bring it up to European normative standard EN45011.

82.

We have set up the Northern Ireland Food Chain Certification (NIFCC) body. We hope that it will be an umbrella organisation that will embrace farm quality assurance for beef, lamb, milk, poultry and pork - one inspection per farm rather than the current four or five. Each scheme would be run independently.

83.

There has been much debate about membership of the FQAS and so on. As I have explained at umpteen meetings with farmers, the new proposal is that there will be a yearly membership fee of approximately £35. I do not know of any club of which membership is totally free. People have a notion that the FQAS was free until now; it was not. Farmers have paid the full running cost of the FQAS since it was set up in 1991. It was funded from surplus money in the classification fund. Each farmer paid his contribution to the FQAS each year. The surplus in that fund has been depleted, and we must move towards an alternative arrangement for funding. Until now, the producers have funded the entire scheme. We have negotiated with the processors, and they are prepared to provide half the funding. The proposed £35 membership fee is really only half the cost.

84.

Primary producers tell me that they do not want to pay £35 and that the money should come from the finished animal. Why should a finisher pay for a farm to be inspected for quality? Surely, each person who wishes to be a member of the FQAS must take some responsibility. We must also accept that the FQAS is voluntary, and no one is compelled to join. At the moment, 50-60% of producers handle 80-85% of the cattle in the scheme. After the foot-and-mouth regulations are lifted and we return to normality, the FQA will be a necessity: there will be no choice.

85.

Mr Kane: The FQAS has been not a viable proposition for farmers at all - it is nonsense. What is the UFU's genuine opinion of the FQAS?

86.

Mr Sharkey: The simple fact is that, if we do not have FQA animals today, supermarkets will not buy them. Perhaps it is nonsense; many things in agriculture are. Nonetheless, if an animal is not deemed to be farm quality assured, we do not have the same market for it.

87.

Mr Kane: Would you agree that the scheme is being abused?

88.

Mr Sharkey: Yes.

89.

Mr Ford: I should like to shift the focus to promotion and marketing. The paper that the union submitted a year ago said that the LMC had carried out its marketing duties well until the BSE crisis but expressed considerable reservations about its achievements since. Can you be more specific about that? Are we getting value for money? What is the relationship between the LMC and the Meat and Livestock Commission (MLC) regarding promotions in Great Britain?

90.

Mr Sharkey: In 1996, when BSE broke out, the mat was pulled from under everybody's feet and everything changed. At that stage, we were exporting a lot of meat beyond Great Britain, and producers in Northern Ireland were receiving a higher price than those on the mainland, because of those export markets. Then, the whole situation changed and we had to buy our way back into the English market, which was the only market left for us.

91.

The situation on the mainland is complex. The MLC promotes British beef and was not particularly happy about promoting British beef so that Northern Ireland processors could fill the market. There was an agreement between the LMC and the MLC that the LMC in Northern Ireland would give some money towards promoting beef on the mainland. I am not exactly sure about the mechanics of that.

92.

The LMC has worked reasonably well. We must accept the fact that consumers shop in supermarkets. We might not like the supermarkets, but if they have a demand from the consumer, they will buy our produce. Whether we like it or not, we must work with them. The LMC has made a reasonable job of securing contracts with United Kingdom supermarkets that we did not have prior to BSE.

93.

Mr Bradley: I thank the Ulster Farmers' Union for the role that it played last week in getting the problems in Newry and Mourne sorted out.

94.

Mr Rowe: The thanks must go to my deputy and our director of commodities; it fell in their lap. They were there when it started, so I let them be there at the finish.

95.

The Chairperson: You were glad to delegate.

96.

Mr Rowe: On one occasion, I told them to extricate themselves from the problem, but they carried on - with good results.

97.

Mr Bradley: You said that the Department of Agriculture and Rural Development monitored standards. Can LMC classification staff operate independently of the influence of processing plant management? How does the number of price categories compare within the confines of the meat plant with the range of prices used when the meat is sold on?

98.

Mr Rowe: We will answer the second part of your question first. We have no documentary evidence to show what way they sell it on. If something is cut up, put in a bag and sold on as processed meat, we need to know where it came from. It is difficult to know whether mince comes from a U3, a O+4 or a P5 and whether there is a difference in the price.

99.

We hope that processors do not have influence over grading standards. The Department of Agriculture and Rural Development should make sure that it polices the process properly. I know that people say that it happens; I have no knowledge of it one way or the other, and I have been involved in the business for some time. I hear it said sometimes, but it is hard to prove.

100.

Mr Dallat: The enormous amount of goodwill that the union has generated extends well beyond Newry and Mourne. In the area that I come from, there is great admiration for Mr Rowe, Mr John Gilliland and others who have handled the crisis so well.

101.

How far does the union get involved in the LMC's promotional work? Is that promotional work of most benefit to the producers that you represent or to other elements in the food chain, such as the processors? Do the retailers exploit the grading system in any way? I accept that the grading system does not benefit consumers much, because they are interested in taste. Do the large supermarkets exploit the grading system to keep prices down?

102.

Mr Sharkey: It is possible that the supermarkets exploit the grading system. We need a classification system for regulation. The supermarkets have a specification within which cattle should be placed.

103.

I am a member of the red meat strategy group that was set up a couple of years ago. It has some money for promotion, and the UFU has some influence on it. To educate producers and let them see what happens with classification in other places, some producers could, if members of the farm quality assurance scheme, go to various places - maybe other countries - to get an insight into what happens throughout Europe. That should be beneficial. We have some input into promotion, but the board of LMC normally looks after it.

104.

Mr Dallat: Would you like to have more input into promotion?

105.

Mr Sharkey: One of our members sits on the board, but we would be happy to have more input into promotion. If there were three or four farmers on the board, they would have more input.

106.

Mr Dallat: I think that there should be.

107.

Mr Rowe: There are few people around who have done as much work on the matter as Mr Sharkey. He sits on the board and on a number of committees of the LMC. He has done good work for his fellow farmers. There are few who know as much about the matter as he does.

108.

Mr Sharkey: I receive no financial benefit from the LMC. I receive no money of any kind. I hope that I did not create that impression.

109.

The Chairperson: It is not an office of profit under the Crown.

110.

Mr Rowe: It is not an office of profit under anything.

111.

Mr McHugh: I acknowledge the union's work in the recent difficulties experienced by the industry. However, I do not agree with the Minister's accolades for others who represent farm organisations. You said that you were generally satisfied with how the LMC does business. Some of the people on that board are well-off people who are attached to as many boards as there are days in the year.

112.

The finishers buy the best quality meat. Processors or the meat plants will see the man who brings in the odd animal as an easy target. We have been talking about quality assurance for years, and we are no better off. Quality assurance is tied to price. The prime motivator for everybody involved is price, take-home pay and returns, and nobody knows that better than Mr Rowe. Farm quality assurance has not occurred, and that is affecting my part of the country - and your part of the country - more than anywhere else.

113.

The current foot-and-mouth problems mean that farmers cannot even sell their stores, and they are the only things that they normally have to sell. We must get this right. We talked about consumers and what they want; they want the cheapest price. There is little labelling to tell people where the product comes from or what is in it. Big Mac burgers can come from Holstein meat, and McDonalds will sell them for as high a price.

114.

The question of grading is a big one. How can we get to the point where the processors do the necessary marketing? I do not believe that they are doing it. Every outfit should have a marketing strategy, and the nearest outlets are, obviously, across the water. Local farmers are having difficulties, but we have not got a large number of animals, and we should be able to make a better job of marketing the product. Our product is a saleable product that is needed now. We should not have a mishmash of bad breeding cows. We talk about using taste as the basis, but nobody has directed us towards Aberdeen Angus.

115.

Mr Rowe: I am part of the community that net exports stores. We are considering ways of moving those stores. We may come back to the Committee for help with that.

116.

The quality of animals has given us a lot of worry recently. Farmers are getting around half of the end-price in the brown envelope, as we call it. Many farmers go out to work because agriculture is not giving them enough income. That is common throughout the country. It is a lot easier to have an easy calving bull, sell the store for what you can get and make it up in the brown envelope or in the wage packet at the end of the week. The idea of high quality is sliding down the scale, and we will have a problem when the whole system becomes profitable once again. When men are able to return to meaningful full-time farming, there will be a push towards higher quality. I am as guilty as any other man of keeping a mishmash of cows instead of breeding through to the best. It is hard to get a good system for breeding good suckler cows, and it always seems to be the good bull calf that dies at birth.

117.

There must be promotion of beef. We must promote today's product in the best possible way. We may have a better product and be in a different situation five years down the road. We were in an entirely different situation five years and one month ago, just before BSE. We do not know what the situation will be in five years; we must take what we have and push it as best we can. We are trying to do that.

118.

Mr McHugh referred to the board of the Livestock and Meat Commission. I believe that any board should be selected on its merit and its ability to do the job. Any promotional board, particularly in the agricultural world, must not be too heavily weighted with farmers; it must have marketers and those who understand the commercial world. The Ulster Farmers' Union believes that the Livestock and Meat Commission needs more farmer representation because, at the moment, it is heavily weighted in the other direction. It needs people who know the market and, perhaps, some people who know the political field, because marketing any foodstuff involves politics.

119.

Mr McHugh: If the 6p difference does not go to the farmers, it will be available for sales. The promotional people could spend a lot more on the sales themselves, rather than looking for funding for marketing from elsewhere.

120.

Mr Sharkey: If that 6p does not go to the farmer, it goes to the processor.

121.

Mr Rowe: The Livestock and Meat Commission (LMC) has no more money than the money that the industry puts in. They are accountable; their accounts are available to us all every year to see what they do with that money. If they want to get more money for sales or promotions, they must take it off one end or the other.

122.

Mr McHugh: They should speak to the processors.

123.

Mr Rowe: The processor has no other spot than you or me - either the market at that end, or you and I as producers.

124.

Mr Savage: I listened carefully to what the president said about the money. There is the LMC, the Meat and Livestock Commission (MLC), which has nothing to do with Northern Ireland, and the Northern Ireland Meat Exporters' Association (NIMEA). Is there any call for both the LMC and NIMEA? I do not think so. The farmer is, ultimately, the fall guy. There may be a conflict of interest, but it all comes down to cost. 'Farmers Weekly' carried a story about an independent survey done by a college in England. The survey showed that the animal making the most profit was the Friesian bullock. I like to see continental cattle, but the nitty-gritty is profit.

125.

Mr Rowe: The LMC and NIMEA are entirely different bodies; they should not be confused. NIMEA is the collective body of the meat plants; the LMC is a different body with different responsibilities, which answers to different people. We could not afford to let those two bodies amalgamate.

126.

One of our great worries is that it looked as if the EU might push in the direction of the Friesian bull. The Friesian bull starts off as worth virtually nothing, but the beef-bred bull starts off with a price. The Friesian bull is a by-product of the dairy industry. If we want to produce our beef as a by-product of the dairy industry, we can wave goodbye to our quality.

127.

Mr Sharkey: Primary producers must remember that, at this moment, they are making no contribution to the LMC; only the beef finishers do. We might think that the meat processors and exporters have done a bad job over the years, but we must look at the other side of the coin. Our counterparts in the Republic of Ireland have had the world at their feet and have been able to export beef throughout the world during the past five years, yet their prices are worse than ours.

128.

The Chairperson: We did not get to the end of our questions. We will write to you about them, and, if you would answer them, it would be very helpful to our inquiry.

129.

Mr Rowe: We would be delighted to receive questions from the Committee, in writing or by telephone, at any time. We are always available to help the Committee in any way, either as individuals or as a body.

130.

The Chairperson: Thank you for attending today.

MINUTES OF EVIDENCE

Friday 6 April 2001

Members present:

Rev Dr Ian Paisley (Chairperson)

Mr Savage (Deputy Chairperson)

Mr Armstrong

Mr Bradley

Mr Dallat

Mr Douglas

Mr Ford

Mr Kane

Mr McHugh

Mr Molloy

Mr Paisley Jnr

Witnesses:

Mr N McLaughlin )

Mr V Boyle ) Northern Ireland Agricultural

Mr O Cunningham ) Producers' Association (NIAPA)

131.

The Chairperson: As you know we are dealing with the Livestock and Meat Commission (LMC) issue and we have questions to ask, but first we will hear the statement from Mr McLaughlin.

132.

Mr McLaughlin: We welcome the chance to make representations to the Committee. We have given you a submission, and we would like to move to questions and answers. The meeting that we held to discuss the Livestock and Meat Commission was fairly supportive of the LMC's role as a referee. We would like to see progress in marketing. The market return for our product is not enough to justify our production costs. However, things do not happen overnight, and we appreciate your concern and your inquiry. We will answer any questions that you have.

133.

The Chairperson: All members of the Committee receive representations from farmers about the classification system. The farmers think that the system lends itself to abuse, because it rests on a subjective decision by one person on the classification of the beast. Farmers feel that that is unfair and have lobbied us strongly about that. There is also the question of pricing. People buying meat from the butcher know nothing about classification; they look at the price.

134.

We feel that, prima facie, there is unfairness in the system. We are informed that a Department of Agriculture and Rural Development official is also present at classification, but his eye is the same. If there is a difference of opinion, they might argue it out, but that is not really a good way to do things. We have also heard a large number of people saying that there are far too many classifications and that the number should be reduced.

135.

Mr McLaughlin: The EUROP range is the accepted European standard. I accept that everybody's perception is different and that, undoubtedly, there is variation within grading. No two graders can grade the same item in exactly the same fashion. They will probably arrive at the same grade but there will be differentiation at the ends of the spectrum. Also, a farmer's perception of the grade that he should achieve may not be realistic. We have farmers who slaughter cattle every week, observe them being graded and would be fairly upbeat about the grading system. However, a farmer who slaughters perhaps once a year might not be so objective and would probably feel aggrieved at not achieving the grades that he feels that he should have achieved.

136.

Twenty-five grades is a large number to try to identify in a 20-kilogram carcass. That is a particular issue with sheep. However, the issue is not grading; it is pricing - pricing according to grade. We have been lobbying for grades and prices to be grouped into three to four zones. We could do without one of the grades, possibly the O+ grade. We could have the scale going from the poor carcasses - the Os and the Ps - to suckler beef, with an adjustment in price. There would be better economic returns from the better grades, so there would be a gap between the R and O range. Pricing is the issue, and there is variation between graders.

137.

The possibility of using a grading machine is being investigated. A machine could be subjective in grading carcass fat, as is the case with pigs, but it cannot provide exact confirmation of the animal. We will wait and see what develops.

138.

Mr Boyle: Many sheep farmers say that sometimes they stand beside the grader while he works. He could be in great form - maybe, he is whistling - and the grading is no problem. Then, everyone goes for a tea break and a different grader comes out. This fellow stands with his head down and does not speak. The farmer starts to notice that he is getting R4s and U4s, even though the lambs come from the same flock, and he gets cross at his grading results. We cannot get away from that; it is just human nature. A fellow can be in good form one day and bad form the next.

139.

I am involved in the Causeway Coast lamb group, and we tell our farmers to go to see how lamb is graded. If they have a bad day, we want them to learn from that, go home to the farm and pick the lambs earlier next time. Farmers are reluctant to take a few hours off to go to a meat plant to see the lambs being graded, but it would solve a lot of their problems if they did.

140.

The Chairperson: The previous witnesses said that farmers who have a lot of cattle going through the grading process do not usually have many complaints. However, a farmer who does not go through the process regularly may find himself in a bad position. That illustrates the subjectivity of the system. It should have nothing to do with how frequently the farmer goes through the process. The graders are not judging the farmers, they are judging the cattle. It worries me that farmers who go through the process only rarely should get bad grades.

141.

Mr Cunningham: A farmer with a lot of stock is in more regular contact with his graders and his abattoir than the farmer who has little stock and can build up a rapport.

142.

The Chairperson: He should not build up a rapport. We accept that someone's attitude might change: even Members of the Committee - great though they are - have their off days. The point is that there is human error in the system, and it affects farmers, who are not getting good prices anyway. We hear that complaint from our constituents, and that is why the Committee decided that we should look at the issue. One complaint is that the number of bands and classifications is ridiculous. Other people ask whether the system is absolutely fair. Is everyone treated the same as everyone else?

143.

Mr McLaughlin: We seem to be at cross purposes. The farmer who goes to the grader occasionally may not have the objective analysis of his animals that he should have. Most farmers would like to class their hen eggs as duck eggs; we never get the price that we expect. There is human frailty on both sides. The problem is not just one of familiarity with graders: there is also fault on the farmers' side.

144.

Mr Savage: The farmer is always at the wrong end of the stick, and I feel that he gets a raw deal. A Departmental official told the Committee that what one grader sees is not necessarily what another grader would see; that seems fair. Yet, a stroke of a pen can mean a difference of 5 or 6 pence more between two grades. On that decision depends whether the farmer makes a profit or a loss. That is totally wrong.

145.

What fairer regulations for the farmer would the Northern Ireland Agricultural Producers' Association like to see in place? The present system cannot continue; there are too many grades. There should be a reduction to three grades. The grading system will have to change or be abolished. I would rather see factory buyers coming into the yard and offering a certain amount of money per kilo for the animal. That way, the farmer will know exactly what he is getting for the animal before it leaves the yard. That is the way it should be. My wish may not come true, but I would have a tough job changing my mind. That is how it used to be done. There must be a fairer way of grading.

146.

Mr McLaughlin: There is a need for an appeals system. In the present system, a grader looks at the animal and if the farmer shouts loudly enough, the animal may be looked at by another grader. There needs to be a system of appeal that is credible to the producers, the graders and the processors. There needs to be an independent appeals system.

147.

If the buyer of the cattle comes to the yard, the farmer is dependent on the subjective analysis of that buyer. He is grading the animal on the hoof, as it were. I know that that happens under the Keenan Kepak system that is used in the South of Ireland. There, the cattle are graded before they go for slaughter, and the slaughter grades are compared with the yard grader's results. The grader's analysis and percentages are analysed as to whether they are right or wrong, hitting the mark or over or under the slaughter grade. By and large, that is also going on with the LMC - and I do not mean to defend them. Their grades are reviewed by European graders who come across to Northern Ireland to carry out trial grades and reviews. The grades are not very far out.

148.

I agree that there are too many prices according to grade. Our system is different from the system across the water and from the system in the South of Ireland. The six price differentials were introduced at the time of the intervention. The grades should be abbreviated; the 0+ grade is probably irrelevant. They could probably be zoned into three broad bands. The fat classifications could also be narrowed down from five grades to three zones.

149.

Mr McHugh: I was not at the early part of today's meeting when the Committee made the decision about who it would meet. I will not ask questions of these witnesses as purported representatives of NIAPA, given the unfounded comments and statements that appeared in the farming press about the people whom I represent. However, I will ask a couple of questions about the document that we have received.

150.

The person who signed the document is a member of the Livestock and Meat Commission. What has he done as a member of that body to address the issues that the Committee raised in its questionnaire? He states that he has

"requested the NIAPA Executive to individually answer the questions posed by your inquiry".

Who answered the questionnaire?

151.

Mr McLaughlin: All members of the executive were asked to comment. I was not at the meeting last night at which the matter was discussed, but my understanding is that the majority of the executive members answered. It is not Miceál McCoy's view; it is the view of other participating farmer members. As such, the document was put together, and Miceál McCoy forwarded it to you.

152.

The Chairperson: The Committee ruled that we would not enter into the dispute. Any questions that the Committee puts to you are part of the inquiry into the LMC. All Committee members agreed to stick to that, although the member who spoke was not present at the beginning of the meeting.

153.

Mr McHugh: Could I have an answer to the first question?

154.

The Chairperson: Yes, but I want to say that any questions will not be about the man who signed the paper, but about NIAPA's opinion.

155.

Mr McLaughlin: Could Mr McHugh repeat the question?

156.

Mr McHugh: Miceál McCoy has been on the LMC for some time. What has he done to address the current issues?

157.

Mr Boyle: In January 2000, farmers picketed meat plants. Miceál McCoy and the Northern Ireland Agricultural Producers' Association entered into negotiations with the meat plants and got the Livestock and Meat Commission (LMC) to come up with a levy that corresponded to what the farmers were paying. Payment of that levy started in July 2000. That was one thing that he achieved.

158.

Mr McLaughlin: As a result of our lobbying, the meat plants have agreed to joint funding of the farm quality assurance scheme (FQAS). There is a greater perception among those in the processing industry that they cannot just run along on the backs of the producers. There is an onus on them, too; it is their industry as well. If the goose that lays the golden eggs is no longer there, there will be no eggs for anybody. The processors realise that the tonnage of meat is decreasing, and there is concern that there will be significant overcapacity in the processing industry.

159.

Mr Molloy: I am a layperson, and I am amazed at the idea that getting to know the grader is one way of getting a good grade. There should be some mechanical or technical way of grading animals; the current system is unfair. I am also concerned that we are hearing a defence of the LMC's position, rather than representation by a farming union of the farmers' position. Everyone wants a balanced inquiry, but at this stage we want to hear about farmers' problems with the grading system and with the LMC.

160.

Mr McLaughlin: I am not defending the LMC. I analyse the LMC's position critically, as I would do with anything else. I do not take sides. There is variation in farmers' perceptions of the LMC - from "very bad" to "doing a fair job". From our contact with farmers, our general perception is that the LMC could do a better job, but could also do a worse job. If the export trade starts to move forward again, the LMC must market our produce, as well as running the grading systems, the farm quality assurance scheme and the red meat strategy.

161.

What is the alternative to the LMC? Will the meat plants grade the cattle? Would that be better or worse? We put that question to farmers, and their replies showed that they want to see the variations tightened up. There are allegations that some people get better grades than others, but it is all conjecture. The LMC itself cannot sell anything; it is a marketing tool for the industry. It is up to us to decide how we use that marketing tool.

162.

The Chairperson: What is your attitude towards the way that the Department appoints people to the commission? Do you think that the commission is representative of the interests of farmers and others? The interests of housewives and others are often forgotten.

163.

Mr McLaughlin: The board of the LMC would benefit from being expanded, perhaps to include some additional farmer members. Recruitment to the board is done on a subjective basis - not by a lobby group. The question is whether the people on the board are representative of the agriculture industry and whether they are au fait with all aspects of the industry. No one who puts forward only his own view will be a good member of the group - people must be aware of the views of everyone else on the board.

164.

The Department has a rigorous recruitment system. With the benefit of hindsight, people might think that they could have hired someone who would have been better for the job - someone who participated more or had done more research. However, they might also have recruited someone worse.

165.

Mr Dallat: We were told, in an earlier discussion, that the grading system did not interest the consumer that much and that he or she placed more importance on taste. Is it possible for the large supermarkets to abuse the grading system in order to control prices? Are there good arguments for revising the system completely? The consumer does not benefit from the system because he or she thinks that taste is more important, and the farmer does not benefit because the grading system seems to exploit him.

166.

Mr McLaughlin: We need a system that encourages farmers to do the best that they can. I accept the point that the supermarkets are flexing their considerable muscles and that taste and eating quality are not included in the calculations. We have suggested that other systems such as the Keenan Kepak system, which uses a nutritional system as well as the grading and confirmation system, should be considered. That system achieves consistency in eating quality, and we are aware that that will have to happen here. Australia has a star system for the eating quality of beef.

167.

Superior carcasses have a greater percentage of better cuts. The price that the farmer is paid does not reflect production costs or even a margin. The difference between grades is only six pence, and that is not the difference between profit and loss - it is only the difference between loss and greater loss. There is a marketing job to be done here. There is a massive job to be done in exports, and the LMC will have to be at the forefront of that.

168.

Mr Dallat: Would you welcome more opportunity to become involved in the promotional activities of the LMC?

169.

Mr McLaughlin: I am a farmer - not a marketer. We are in an unfortunate situation, in which the processors are the marketers. They have been amply rewarded for their marketing work. The processors can take their cut, but the primary producer is left to salvage what he can out of it. I would like to see a system brought in whereby there is a percentage reward for the LMC if we achieve an enhanced market return. We have also been asking for an ombudsman who will take account of the margins coming from the end product and who will have power to apportion the rewards.

170.

Mr Boyle: When lambs or cattle are taken to be slaughtered, there are all the different grades. When the meat is cut up and packaged in a supermarket or is sitting on a butcher's shelf, it is not graded from a U3 down to a P grade. The grading system relates only to paying the farmer, and we all agree that it is open to abuse.

171.

Until BSE hit in 1996, any animal could be turned into money. Farming was good. Now we have a different scenario; the whole country has to look at things differently. People have to be re-educated about eating quality, and they must tell farmers what they want. There must be a collective effort to increase awareness. My neighbours say that they would not eat lamb. I asked them why not, and they said that it was too hard to cook. Although I am no gourmet chef, I said that I would cook them lamb chops. Lamb chops can be ready in 10 minutes, and they are lovely. My neighbours would not believe it. People are - for want of a better word - ignorant, although I would not want to tell them that.

172.

The Chairperson: The danger for our farming community is that the big men dictate what they want. The big stores give the orders. It is not really the housewife; she can buy only what is on the shelves. The primary producer has his back against the wall, as we brought out in our report.

173.

Mr Bradley: I come from Newry and Mourne, and, just as I did when the representatives of the Ulster Farmers' Union were here, I would like to pay tribute to NIAPA for its efforts to resolve the problems in the Newry area last week. That assistance was appreciated.

174.

I was going to ask whether the grade of meat could be improved between being graded and reaching the supermarket shelf, but I think that you have answered that question. Can LMC classification staff operate independently of the influence of the processing plant management?

175.

Mr McLaughlin: There is a lot of innuendo in that question. They are subject to audit systems, including European audit systems, but sometimes it can depend on what side of the bed someone got out of. It is all down to human variability. The innuendo is that when there is a good market for a superior product, or when product is in short supply, the grades are better; when there is an over-supply, the grades are worse. That is the perception of the farmers. When farmers are under strain, that can be a severe blow.

176.

Mr Boyle: Farmers like to think that they are the best judges. I like to think that I am a good judge of lambs. I pick them on Wednesday, and they are killed on Thursday. When the grades come back, I might be surprised to find a U4, or maybe two or three U4s. That means that I would lose £5 for that lamb; I will be kicking myself. When my father asks how well the lambs did, I tell him that I had five U4s, which means that I am down £25; that is half the price of a lamb. The next week, I would try to be much tighter in grading the lambs.

177.

Farmers believe that in the good months - July, August and September - when lambs are thick on the ground and ready to go, there tends to be more fat on the lambs according to the grading results. In January, February and March, lambs are in short supply, and there do not seem to be any U4s or R4s. Perhaps, farmers are busier in July, August and September and do not pick the lambs in the week that they should. We try to tell our men that, after a bad week, they should go to see their lambs being graded the following week. They should be happy in their own mind that they are doing the right thing. Many farmers feel that any error will fall on the side of the farmers and never on the side of the meat plant.

178.

The Chairperson: That is a frank answer.

179.

Mr Ford: The written submission included a detailed answer about the LMC's marketing and promotion work. In particular, NIAPA seems to be happy with the relationship between the LMC and the MLC, as regards promotional materials, at least. What are the long-term marketing needs, particularly given the decline in red meat consumption?

180.

Mr McLaughlin: Red meat consumption is in decline. Generally, consumers are more discerning and better educated. They have specific requirements such as cookability, the speed of cooking and convenience. Also, a nice package always sells well. The marketplace has changed since the old days, when carcass beef was sent to Smithfield Market or carcass lambs sent to Rungis. That is now the bottom end of the market.

181.

We are also subject to global buying forces and, as a result, the world has become a smaller place. To get the return that we require for our producers, we need a marketing strategy, although farmers may not be au fait about how to do that. We will have to supply certain types of product in a consistent way - consistently good or consistently bad, but it must be consistent. We hope to be consistently good. We should also market the natural advantages that we have here - the "clean and green" image, as it were. There is a great opportunity now that the foot-and-mouth crisis is abating. We are free to do whatever we can to maintain our health status.

182.

Money was given to the LMC to buy into GB marketing. As we are in a non-export situation, that is where our market is. We are trying to target the higher end of the market - Marks and Spencer, Tesco and Sainsbury's - but we are concerned about the possibility of intervention at disastrous prices. That was a mode of beef marketing throughout the 1970s and the early part of the 1980s. That is not something that we should contemplate going back to.

183.

Mr Ford: Given our clean, green image, should we distinguish ourselves more clearly from Great Britain?

184.

Mr McLaughlin: A lot of thought has gone into the image. What image of Northern Ireland should we present? Scotland can represent itself using the thistle and the heather. The Republic of Ireland has the shamrock. I hope that we are entering better times in which we can present an image that is different from that which has traditionally been associated with us.

185.

The market is there for us, and we have got the tools, including the Internet, to get access to it. The world is smaller now, and it is easier to get access to world markets than it used to be. Rather than the world coming to us, it is easier for us to get our product to the world. Our brand must be snappy. It must be consistent, and it must appeal to the consumer. The 'Green Fields' brand was a success, and, perhaps, we could emulate that success. However, the competition has not been idle. Australia and South America are getting their act together, and there is also Scotch beef. It will always be a running battle.

186.

Mr Kane: Can NIAPA see a possibility for branding that would complement the FQAS? Is there a need for FQA standards of production to be standardised among EU states?

187.

Mr McLaughlin: Both of those things are going ahead. Branding is essential, and a lot of thought is going into identifying a brand. We are also involved in developing the Northern Ireland Food Chain Certification body, which is accepted throughout Europe as a bona fide independent farm accreditation scheme that is totally independent. We will build our requirements and standards into that scheme, within the broad spectrum of what is acceptable.

188.

We must take the farming industry forward, especially the 25% or 50% of it that is willing to adapt. We should use the carrot, rather than a stick. We should explain that farmers whose stock is farm-assured from birth to slaughter are getting 200 pence per kilo. We should explain that such farmers maintain consistent nutritional standards, that their farms are open to audit every day of the year and that that is why they get an appropriate market return. We should tell our farmers that they could get that too. That has been achieved in the South; we should do likewise.

189.

Mr Kane: How can more applicants be attracted to the FQAS if the LMC raises the cost to producers? What are the odds that levy costs will not be passed back to the producers?

190.

Mr McLaughlin: That has been the subject of debate since the meat plant pickets. The meat plants are now prepared to differentiate in price between quality-assured and non-quality-assured animals. Scotland is moving towards lifetime quality assurance. The problem, as things stand, is that animals coming into my farm, for example, have to be there for only 70 days to get quality assurance. There is no onus on the person supplying me to be quality assured. However, if the quality assured period is extended back, the price bonus of being quality assured will mean that the onus will move back towards the primary producer. That will bring the responsible producers on board.

191.

Mr Kane: Is the system being abused?

192.

Mr McLaughlin: No system is perfect. I agree that the system, although not being abused, is being exploited. I would like to see the quality assurance period extended. That is a market requirement. In Northern Ireland, we have to market our produce; we must jump through the hoops to be better than everyone else. Everywhere else in mainland Europe, there is a large domestic population. We are the only ones in the northern hemisphere who are biting in, as it were.

193.

Mr Armstrong: Everything is in the eye of the beholder; that is our problem. Our farmers feel badly done by. Prior to BSE, meat plants bought cattle on the hoof, and farmers believe that they received a better price for their stock then. That stock still had to go through a meat plant and be graded, but the farmer felt that he was more in control - whether he was getting a better price or not, he thought that he was in control. How can we restore that confidence? The submission states that, because classification relates to pricing policy, farmers perceive that the LMC is to blame. How could pricing be clarified and improved?

194.

Mr McLaughlin: The control was that if the farmer was not getting the price that he wanted, he could withhold his animals. Now, if the farmer does not get the price that he wants, there is not much that he can do about it. Perhaps, for buying on-the-hoof, we should have some kind of branded product, as with the Keenan Kepak system, in which animals are bought on-the-hoof and in the yard by a central person. Some plants are doing that, and it is working reasonably well. If anything, the buyer in the yard tends to verge on the cautious.

195.

Mr Armstrong: The farmer is content.

196.

Mr McLaughlin: Exactly.

197.

Mr Boyle: The farmer is getting a flat rate, which is all right if there is demand for the product. If a U3 or R3 bullock or heifer is considered to have better eating value than an O3 or an O+3, the person producing the better stock should get paid more money. That would be better than having a dealer coming to a yard and buying 10 bullocks at a flat rate. If a farmer is producing better quality animals that will get a U or an R grade, his long-term aim will be to produce better stock, provided that the housewife wants the U or R grade.

198.

Mr Savage: If a dealer comes into a yard and gives the farmer £1·70 per kilo, it gives the farmer confidence.

199.

Mr Armstrong: The LMC should maybe have a marketing tool that will allow people to know what the nutritional value of that meat is. The housewife can look at that docket and see that there is less fat on that meat and that it will be better value for her family.

200.

Mr Boyle: Perhaps, we are wrong to say that it is the housewives who buy the food. A lot of them are out working. Maybe it is the househusbands who do the cooking.

201.

Mr Armstrong: Everyone wants to know about the nutritional quality of meat, just as they do with, for example, a pot of yoghurt.

202.

The Chairperson: Let us leave yoghurt for now and come to the next question.

203.

Mr Paisley Jnr: The way forward is to remove the subjective aspects of classification. Can a mechanical process be developed?

204.

Mr McLaughlin: There is a machine in use in Australia. It cannot really provide grade conformation. It can probably grade fat, and it can estimate red meat yield and the percentage of red meat by bone structure. The consumer pays for red meat, not bones. If such a machine could be found, it would free up a lot of money.

205.

Mr Paisley Jnr: It would speed up the process.

206.

Mr McLaughlin: We would not be tied to office hours, as it were, for grading. It would remove the element of variability, as long as we can have a cast-iron guarantee that the machines could not be tampered with. Hopefully, we can develop it. We have seen a massive advance in foot-and-mouth analysis over the past month.

207.

Mr Boyle: We would advocate a pilot scheme. In the Causeway area a few years ago, we had two fellows over from Scotland with a scanning machine to grade lambs before they went to Foyle to be killed. They scanned five or six hundred lambs in a couple of hours, but they were able to do it only on fat grade, not carcass. Getting a score for a carcass is not hard; the problem lies with agreeing the fat score. I was not there, because I was busy with the silage, but the machine was more than 90% accurate, going by the results of the grader on the day. So, we would advocate that plants put in a pilot machine and start working with it.

208.

Mr Douglas: Most of the questions that I was going to ask have been answered. However, the inquiry is into the work of the LMC, but there is an acknowledgement that there is a need for better stock. Good will come out of this, and it must be put to the farmers who have not got the message that our stock must be improved. When prices improve, things will be better for everyone. Better quality stock will get us a better price.

209.

Mr Cunningham: Farmers are not being paid enough for the quality stock. For instance, a farmer might find that an old, rough bullock is making more money than the fancy U3 bullock. That is a problem. There should be a bonus paid on the higher quality animal.

210.

The Chairperson: We will wait a long time for the organisation that we are looking at to do that for the farmer. It will be a mighty long time. Paradise will have come when they give the farmer that. We need to ask for it.

211.

Unfairness seems to run all through the system. It is not good to have a system that relies on the judgement of a one man's eye. We need a system that we can trust. If I kept cattle, I would be critical of someone's eye judgement if I thought that my beasts were better than that. The system leads to opposition and controversy, and that is not good. A person has a right to go to the market and get fair play; he might not get everything that he wants, but he will, at least, get a decent price.

212.

Mr Cunningham: We are not getting fair play from the factories.

213.

The Chairperson: The Committee thinks out loud so that our message will go back to the Department of Agriculture and Rural Development, but something must be done. Farmers tell me that the system is not good, and that they are unhappy about it. There are far too many bands. How does the person making a judgement have all 10 bands in his head? We are asking him to do an impossible task.

214.

Mr Boyle: If the stock is good enough, he does not have to go through all the bands and can work within, say, three bands. If he is not getting paid for the quality stock, he has to find letters and numbers for the poorer quality animals that come in, which is confusing. The farmer may wonder what one R4H will get - the top price quoted is £1.72 - or what an 03 is worth.

215.

Mr Paisley Jnr: What will it taste like?

216.

The Chairperson: It might taste better. We have not got through half our questions, so we will send you the remainder. It would be helpful if you could get answers back to us as soon as you can. Thank you for coming.

MINUTES OF EVIDENCE

Friday 27 April 2001

Members present:

Rev Dr Ian Paisley (Chairperson)

Mr Savage (Deputy Chairperson)

Mr Armstrong

Mr Bradley

Mr Dallat

Mr Douglas

Mr Ford

Mr Kane

Mr McHugh

Witnesses:

Ms B Rodgers ) Minister of Agriculture

& Rural Development

Mr G McCracken ) Department of Agriculture

Mr L McKibben ) & Rural Development

217.

The Chairperson: I welcome the Minister and her officials.

218.

Ms B Rodgers: I welcome the opportunity to contribute to the Committee's consideration of the role of the Livestock and Meat Commission (LMC). I have provided a response to the questions raised by the Chairman in his initial letter about the inquiry, and I have sent the Committee a copy of the report of the quinquennial review of the LMC, completed last year. Although that report was not published, it has been circulated to the industry organisations that contributed to the review, and the main findings and recommendations were largely agreed by them.

219.

The specific functions and responsibilities of the LMC are set out in legislation - the Livestock Marketing Commission Act (Northern Ireland) 1967. Broadly speaking, its remit is to assist the development of the livestock and livestock products industries. In recent times the LMC has been operating in a difficult environment. The ban on beef exports; the resulting difficulties in securing commercial markets for Northern Ireland red meat; the relative strength of sterling; the unacceptable level of producer profitability; and the increased costs throughout the production, processing and distribution chain have all meant that the trading environment in which the LMC operates has been far from stable.

220.

Despite that, I note the broad support for the LMC across virtually the whole industry and the wish for the LMC to take a more active and central role in areas such as generic marketing and provision of services to the industry.

221.

Among the LMC's strengths are that it is independent of the Government and specific interests in the industry; it has a broad base of skills that are currently relevant to the industry; and it is broadly representative of the industry at commission level. Its problems include the level of funding available to the LMC through the levy income and the problems that the industry faces as a consequence of BSE and foot-and-mouth disease. However, a clear role exists for the LMC both in existing statutory functions and in developing other activities to serve the industry.

222.

The quinquennial review states that if the LMC had not existed prior to the circumstances of recent years it probably would have been necessary to establish such a body.

223.

I am aware of the concerns about the classification of carcasses at meat plants, and of the consequential criticism of the LMC and, on occasions, the staff involved in classification. However, classification is not a core function of the LMC. The industry requested that it be undertaken by the LMC, as it is an independent body. That was reaffirmed in a consultation on the quinquennial review. The LMC and everyone else want to move towards a more objective form of classification but the development of the necessary technology means that that is some way off. The LMC is not solely, or even mainly, about carcass classification.

224.

The Chairperson: One response to the inquiry suggests that money from sheep annual premium (SAP) payments under the modulation proposals could be used to support LMC activities. Can you confirm whether money for marketing could be drawn from the modulation funds, or more exactly from corresponding Treasury funds?

225.

Ms Rodgers: That is unlikely. We can only carry out what is contained in the Rural Development Plan. That is unlikely since that was not in the plan.

226.

The Chairperson: Will you confirm that to the Committee?

227.

Ms Rodgers: Yes.

228.

The Chairperson: In its submission to the inquiry the LMC recommended that the European Commission be urged to adopt modern technology and change its price reporting structure from subjective grades to one based on meat yield objectively measured. Would you support that line in negotiations with the Ministry of Agriculture, Fisheries and Food (MAFF) and the European Commission?

229.

Ms Rodgers: It will not be easy and they are looking at ways of achieving it. However, I would support that.

230.

The Chairperson: My other question relates to appointments to the LMC. According to the LMC's most recent annual report the chairman has been a member since 1992, was appointed as chairman in 1997 and was reappointed as chairman until October 2002. Two other members were reappointed from 1 January 2000 and a fourth member has been in the LMC since 1995. Are you satisfied that those reappointments have been sufficiently scrutinised? The guidance states that second reappointments are to be exceptional, therefore that means that some difficulties might loom in the future.

231.

Ms Rodgers: The Nolan procedures have been strictly applied to all appointments, and those procedures have been examined twice and were found to have been correctly applied. All new appointments are subject to the Nolan procedures, are advertised in the local press and relevant parts of the industry are notified about them. There is also an appointments procedure that includes shortlisting, and an interview panel that includes an independent person and senior people from the Department.

232.

The Chairperson: Would you consider allowing sector bodies to nominate members to the LMC rather than having every appointment made by yourself?

233.

Ms Rodgers: The legislation requires that I make the appointments. A change in the legislation would be required to do that. We try to ensure that the necessary expertise drawn from the different sectors of the industry is found in the LMC.

234.

The Chairperson: Would you be prepared to have the legislation changed so that sector bodies could make appointments?

235.

Ms Rodgers: We would have to be careful that nominations would be in accordance with the Nolan procedures. I am not sure that that would be the case if we insisted on sectoral appointments.

236.

Mr McHugh: Our inquiry is quite important in that it follows on from various reports that we have previously come up with. Some farmers would be happy with certain parts of the LMC's work. For a body that is partly responsible for increasing quality over the years - that was one of its main objectives at the start - it has not been able to do that on enough farms through encouraging farmers to increase quality by the returns that they receive.

237.

The worst Friesian beef could make as much for many farmers over the years as opting for high quality grading and classification - that is not good for the industry. The LMC has not achieved that and it has not been able to eliminate those things. Farmers would maintain that that is because of certain people's vested interests.

238.

That may also affect appointments. People who sit together on those bodies for too long develop a cosy relationship. They may find that because the same groups are paying them, they must stay and take orders rather than properly scrutinise. Moreover, I am not sure that they have the farmers' broad support.

239.

Ms Rodgers: I thank Mr McHugh for his questions. The reason we have the beef quality initiative, for which I have procured £2 million, is that beef quality has been recognised as a problem both by the LMC and by the Department. The LMC contributed to the debate and the proposal surrounding that. It is also responsible for the Northern Ireland farm quality assurance scheme, which is important from a marketing and quality viewpoint.

240.

There is ongoing dissatisfaction in the area of classification; that is a difficult issue. It is only natural that every farmer wants his meat classified as being the best. EU inspectors were over in 1998 checking on our classification procedure and were initially unhappy with it. They came back later in the year and expressed total satisfaction with the manner in which classification was carried out. Those who carry out the classification are trained and monitored by the Department, LMC officials and the EU. Those on one end of the scale will never be happy; it is a subjective process, which is continuously monitored. The current situation, therefore, is that EU inspectors have expressed satisfaction with it.

241.

Mr McHugh: It is not achieving the goal that we would have wanted for the overall industry.

242.

Ms Rodgers: There is no doubt that there is a problem with beef quality. That is why we have put £2 million into the beef quality initiative. One of the reasons is that subsidies are only based on headcount; there is no incentive for improving the quality. Therefore an absence of beef quality cannot be blamed on any industry sector. Farmers are anxious to improve the quality of our beef, as better beef quality will be an important marketing factor when our outside markets are reopened.

243.

Mr Dallat: Should a farmer have the right to appeal a classification to an independent body, rather than to a senior LMC officer? Would that not remove any controversy surrounding classification?

244.

Ms Rodgers: Controversy has surrounded classification. I am not aware of any evidence that the existing appeal mechanism is unsatisfactory. There will be additional costs if any other body were to take over the appeal function. There will be difficulties because there is no obvious body to whom that function could easily be passed.

245.

Mr Bradley: The three-year promotional plan undertaken by the red meat strategy development group will come to an end in 2002. Will the Department continue to fund the group after that date?

246.

Ms Rodgers: The Department has given no commitment to do so, but we will keep it under review and make a decision at the appropriate time. If necessary, we will seek funding.

247.

Mr Savage: One of the recommendations of the LMC's quinquennial review is to continue consultations, with a view to increasing the producer levy to a level that is equitable vis-à-vis the position in Great Britain. The general levy rates in Great Britain for cattle and sheep are 205p and 31p respectively, of which the processor pays half. Do you intend to increase the maximum levy as set out in the Livestock Marketing Commission (Maximum Levy) Regulations (Northern Ireland) 1976? Producers are concerned that any increase in that levy charged to the processor would eventually be passed back to the producer. How would the Department ensure that that would not happen?

248.

Ms Rodgers: The simple answer to the last part of your question is that we cannot interfere in any commercial decisions by any private companies. On your overall question, it is vital that the LMC is properly funded to carry out its statutory function. That requires levies to be paid, but, subject to comments from interested parties, plans to amend the legislation to increase maximum producer levy and introduce a processor levy are under way. That levy should be reviewed annually and amendments to the basic levy arrangements may be affected by subordinate legislation. However, any extension of the levy system to other parts of the food chain would require primary legislation.

249.

Mr Savage: A number of years ago - before the LMC became too involved with the situation - representatives from the various slaughterhouses visited farms and a price was given for the animals. That could have been 200p a kilo or whatever was appropriate. We should return to a similar situation; I do not agree with grading. I know there are Holstein steers, but a good cross-bred Friesian is as good as any Simmental or any breed that the Department will produce through artificial insemination. I have seen surveys from Great Britain that state that the Friesian cross-bred cattle are more profitable than continental cattle.

250.

When some graders see a Friesian animal - a black-and-white one - they adopt a completely different outlook. There must be a simpler way of doing things because some of the prime cuts from Friesian cattle end up on some of our top supermarkets' shelves. There must be a fair assessment. I am not blaming the LMC in any way - we have got to share that responsibility. At the stroke of a pen, the farmer is the fall guy every time. I am sorry, Chairman, for taking up time, but I will keep quiet later on.

251.

The Chairperson: That would be a miracle.

252.

Mr Savage: Four different Departments came before the Committee one day, and each one was living off the farmers' backs. The farmer is being screwed into the ground all the time and he cannot take any more. You have seen the last generation of farmers that will work for nothing. We need a fair assessment of what the farmer produces. The farmer does not want to rip anybody off, but he wants to be placed on a level playing field. I am sorry for taking up time.

253.

Ms Rodgers: You have taken it anyway. Thank you Mr Savage. I understand that farmers have a problem with the issue of pricing. Farmers are at the bottom of the chain, and they have no one to pass any problems on to. Those are all commercial issues that are outside my Department's domain. However, we hope to see co-operation along the food chain, and discussion about the food chain and its different links. We should then arrive at a situation in which everyone understands what each part of the chain costs, and whether the costs that are passed on are exorbitant. We must also arrive at a situation in which everyone gets a fair profit.

254.

With regard to classification, and what used to happen, I recognise that I am speaking to an expert practitioner and I bow to his better knowledge. However, there is an EU requirement for classification, which we simply cannot get away from.

255.

The Chairperson: I should have mentioned that Messrs Armstrong, Bradley, Douglas, Kane, McHugh and Savage declared an interest during an earlier evidence session. If there is anybody whom I have not mentioned, who needs to declare an interest, they can add their name to the list.

256.

Mr Kane: Minister, you must have noted that there are no women representatives on the LMC board? Does the Department of Agriculture and Rural Development perceive that as an oversight?

257.

Ms Rodgers: I assure Mr Kane that that has not gone unnoticed by me, and that I am very anxious to address that issue as soon as possible within the Nolan guidelines. At one time there was a woman on the board. She was from across the water, and I think her name was Margaret Percy.

258.

Leaving facetiousness aside, it is important that we have a gender balance on committees, because, otherwise we will not reflect society. I am pleased that Mr Kane is aware of that necessity.

259.

The Chairperson: Mr Kane belongs to a party that accepts that view.

260.

Mr Armstrong: Behind every good man there is a good woman.

261.

The Chairperson: Behind every good woman there is a good man.

262.

Ms Rodgers: Mr Chairman, there is also a saying that goes "Behind every good woman is a man who tried to stop her".

263.

The Chairperson: You could turn that around, and say that behind every good man there is a woman who tried to stop him.

264.

Mr Armstrong: In the light of the foot-and- mouth outbreak, the promotion and marketing of meat products from Northern Ireland will undoubtedly assume more importance if the industry is to regain lost ground. Does the Department have any plans to increase funding to attain that goal? Would you be in favour of a price based on meat yield, if the objective classification could be obtained?

265.

Ms Rodgers: We are keeping marketing under review, and we will be discussing that at a national level within the UK. A marketing strategy will be needed more than ever. We were looking at it in preparation for the lifting of our export ban, but given the further deterioration in that situation, the need for marketing will be much more to the fore when we return to normal. We will be keeping that under review and, from my point of view, it would be a priority.

266.

Mr Armstrong: Do we need more representation from farmers on the LMC, including farmers' wives?

267.

Ms Rodgers: I would go for the farmers' wives anyway.

268.

Mr Armstrong: I have noticed that meat now comes so fresh it does not have the taste, and the culture of meat has to be addressed. I do not know if that is a livestock problem, or whose problem it is, but meat has to be cultured before it is eaten.

269.

Ms Rodgers: My butcher always gives me well- hung meat, so I cannot complain. I accept that if it is not well hung it unnecessarily gives meat a bad name.

270.

There are two producers on the LMC out of the seven members, which, considering that it must reflect the whole industry, is a fair proportion. The report contains a proposition to increase the membership to nine. Consumers are not represented, which they would complain about. The technology end of the industry could also possibly be represented, as the report has mentioned. Producers are reasonably represented at the moment in having two members from the respective unions.

271.

Mr Armstrong: The farmer's wife and the consumer know what they want.

272.

Mr Douglas: Individual producers feel that they have had to pay the levy to have their stock classified, and on many occasions they are not satisfied with the grade received, especially for similar stock. At the same time the meat plants have freedom to sell their carcasses at premium prices once they are classified. That is the main problem for primary producers - they seem to be the loser every time. Meat plants have been expanding and are showing huge profits - that needs to be addressed. The classification needs to be changed as soon as possible.

273.

Ms Rodgers: Perhaps the problem to which Mr Douglas refers relates more to the pricing arrangements in Northern Ireland. The LMC has facilitated discussions between producers and processors on those issues. At the request and recommendation of this Committee, the Department has agreed to investigate the price differentials.

274.

Mr Douglas: It is well known that the cattle, and even sheep, were classified and went into the same container whenever they were going across to France. I have heard on good information that they were all going at a fairly good price. However, the producer was undoubtedly cut severely.

275.

Ms Rodgers: I cannot comment on that because that is a commercial issue.

276.

Mr Douglas: It needs to be addressed.

277.

Ms Rodgers: We are investigating the differential in prices and we are aware of the problem.

278.

Mr Ford: I want to follow up on Mr Armstrong's point about the size of the LMC. You acknowledged that there are two views as to how additional seats should be allocated, either to the producers or the wider commercial background. The quinquennial review appears to suggest the latter - bringing in a wider range of expertise. Are you inclined to move that way at this stage?

279.

Ms Rodgers: We will be consulting the industry on any changes that we intend to make. I have an open mind, and I am prepared to listen to other people's views.

280.

The Chairperson: Minister, why has it taken so long for the quinquennial review to be produced, even in draft form? When do you expect the final version to be published?

281.

Ms Rodgers: The review was being prepared under direct rule. It was finalised then, and it probably would have been published during the transition to devolution, but we had the suspension. There were several hiccups. I cannot explain that any further.

282.

The Chairperson: When do you expect to undertake the next quinquennial review? Will it be in 2003 - five years from the start of the current review - or will it be five years from the publication date of the current report?

283.

Ms Rodgers: That is a very good question.

284.

The Chairperson: My questions are all good.

285.

Ms Rodgers: The work was undertaken around 1999. Therefore I expect the next quinquennial review to be starting around 2004, based on the work that was done. However, I cannot give you a day and date.

286.

The Chairperson: That concludes the questions. Minister, as we are just beginning our investigation, we will submit other questions to you that will require answers. I would appreciate some response from your Department on evidence that we are hearing. I can assure you that they will all be good quality questions.

MINUTES OF EVIDENCE

Friday 27 April 2001

Members present:

Rev Dr Ian Paisley (Chairperson)

Mr Armstrong

Mr Bradley

Mr Dallat

Mr Douglas

Mr Ford

Mr Kane

Mr McHugh

Witnesses:

Mr D Rutledge )

Mr G Lowe )

Mr C Duffy ) Livestock and Meat Commission

Mr M McCoy )

Mr I Mark )

287.

The Chairperson: I would like to bid the members of the Livestock and Meat Commission (LMC) welcome to this meeting. I understand that your members are here and in the Gallery. We have decided to have a look at the commission under four headings. The funding of the LMC, including the operation of producer and processor levies and core funding from the Department; the provision by the LMC of classified services in both the beef and sheep sectors; the LMCs promotional activity; and the Department's appointments to the Livestock and Meat Commission, including reappointments. We will also take account of the five-year review of the commission.

288.

Thank you, gentlemen, for coming. Does someone want to make an opening statement to us?

289.

Mr Lowe: Good afternoon, Chairman, and good afternoon to members of the Agriculture Committee. My name is Gerry Lowe and, as chairman of the Livestock and Meat Commission, I thank you for this opportunity to contribute to your inquiry into some aspects of our activities.

290.

Our chief executive, David Rutledge, has provided a written submission which we believe is a comprehensive response to the questions set out in your letter of 13 March. In it there are a number of matters raised that are of fundamental importance to the commission.

291.

First, the quinquennial review, although not yet published, has now, I believe, been forwarded to you in final draft form by the Department. I hope that is correct.

292.

Secondly, you raised the critical issue of LMC funding. It is clear from the submissions that we have made that the LMC will not be able to sustain all the activities with which it is currently involved if additional funds are not made available to us. It will be our objective, however, in the future to deliver the best value we can to our industry with whatever funds industry or Government provides. Our statutory role is to maximise returns to the Northern Ireland red-meat industry, and we shall continue to do this with whatever resources are available to us from whatever source.

293.

On the subject of classification, we provide a service to the industry as a result of encouragement to do so from farming organisations and processors. We have neither any right to that business, nor, indeed, any desire to continue to provide that service if a better solution can be found to meeting the European regulation. This regulation requires classification of all cattle offered for trade and sets down and controls the standards which are operated in every member state in regard to cattle and sheep carcasses.

294.

We have provided you with a very comprehensive response with regard to the activities with which we are involved. We felt it important to set this out in considerable detail, as it is, indeed, very much a core activity of the commission, involving a major expenditure item of levy income.

295.

Appointments to the commission are not the responsibility of the commission; they are the responsibility of the Minister. Our response to your inquiry is to highlight what we perceive to be the necessary qualities of persons appointed to the board.

296.

Finally, Mr Chairman, may I formally introduce the members of the commission to the Committee, beginning with myself. My primary interest is Lowe Refrigeration. As a global supplier of services to the food exhibition industry I have considerable experience in the promotion and marketing of agrifood products internationally. I also have strong family connections with the local farming sector. I have been a member of the LMC since 1992 and was appointed chairman in January 1997.

297.

Colin Duffy was appointed to the LMC in January 2000. He is the current chairman of the Northern Ireland Meat Exporters' Association (NIMEA). He is a board member of the Northern Ireland Food and Drink Association, and his main interest is in running the ABP plant in Newry, where he has been involved since 1996.

298.

Miceal McCoy has been on the LMC board since 1997. He is a specialist beef farmer running a herd of suckler cows. He combines his farming interest with off-farm employment as manager of his local South Down/South Armagh rural development partnership group. He is also chairman of the Northern Ireland Agricultural Producers' Association (NIAPA).

299.

Owen McMahon has been a member of the LMC since 1995. He runs a very successful retail butchery in Belfast and is past president of the Northern Ireland Master Butchers' Association and a founder member of the Northern Ireland Elite Butchers' Group. He also sits on a Department of Health advisory panel in London.

300.

Ian Mark has been a member of the LMC since 1997. His primary interest is in farming. He is a member of the Ulster Farmers' Union cattle and sheep committee and is the immediate past chairman of that committee. Some years ago he, along with others, formed a company called Lean and Easy, adding value to his specialist lamb products. The company is now very successful and has many prestigious customers.

301.

Richard Watson has been a member of the LMC since 1999. He is a director of the Foyle Food Group and a freeman of the Fellowship of the Institute of Meat Guild and a board member of the Meat Training Council.

302.

Gordon Orr is the most recent commission member and was appointed in October 2000. He is an independent management consultant specialising in strategic market planning, mentoring and training in the agriculture and food industry. He is a past regional chairman of the Chartered Institute of Marketing.

303.

You are already acquainted with David Rutledge, our chief executive, and Phelim O'Neill, our marketing manager. Mr Rutledge will lead the responses to your questions with support from Mr O'Neill or any commission member as is deemed appropriate.

304.

The Chairperson: I have already read out the terms of our inquiry. Thank you for the submission; it contained meat, not bone. It was very helpful as it covered some of the matters that the Committee is concerned about. In that submission you explained that the LMC was making a significant contribution to the budget of the Meat and Livestock Commission (MLC) in Great Britain. That was to help ensure full and proper qualification of the attachment of the British meat brand in Northern Ireland meat.

305.

I want to ask a few questions on that. Are the MLC's promotional activities accessible in Northern Ireland, and are they sufficiently generic to include Northern Ireland? Is the growth in beef consumption - 5% according to your paper - equally applicable to Northern Ireland as to Great Britain? The Ulster Farmers' Union has worries about media reports of widespread dissatisfaction among GB producers about the activities of the MLC. Can you comment on those concerns? Could the LMC not operate locally based promotional activity under the authority of the MLC, rather than accept its activities?

306.

Mr Rutledge: Regarding access to MLC promotional campaigns, it is important to be aware that our contribution is to qualify for the "British Meat" label in the GB market. That is not something that is used to any significant degree, although some of the GB multiple retailers do use that brand in Northern Ireland. Our interest is in securing the market share we currently enjoy in GB. We concluded that this is the most effective way of contributing towards that part of the market for Northern Ireland beef, which we have highlighted in our report as being of the order of 60% of our current slaughterings, and is the most critical market in which we operate. It is not necessarily to do with the Northern Ireland market that we chose to contribute to MLC. We do some of our own work in Northern Ireland, as described in our paper.

307.

The 5% market share is the order of magnitude of the growth that has taken place, comparing 1995 beef sales in Great Britain with the 1999-2000 figure. I am not exactly sure of the start point and end of those years - if you want that specifically, I will have to refer to my colleague. That percentage growth is monitored by the collection of statistics by sub-contracted organisations to MLC. We do not have past records of consumption in Northern Ireland to the level of detail that has been collected in GB. Therefore we cannot definitively say whether Northern Ireland has enjoyed the same growth since 1995. It probably has reflected a similar pattern, but I cannot say that in as definitive terms as the MLC can of the GB market.

308.

The recent dissatisfaction expressed in MLC by producers in that jurisdiction has focused mainly on the pig industry. The major distinction between our operations in Northern Ireland, and on behalf of the Northern Ireland industry, is that we do not have an interest in the pig sector. That was not allocated to us in the 1967 founding legislation, under which the LMC was created. The plight of the pig industry in Great Britain over the last couple of years has been widely publicised and is unfortunately shared by our own industry in Northern Ireland. That is the main core of the dissatisfaction. There will inevitably be criticism of any organisation attempting to do the work that both the MLC and ourselves do. It is not possible to satisfy 100% of the people, 100% of the time.

309.

We have recently experimented with buying some of the MLC television advertising and have run a campaign locally over the autumn and winter months. There is always a question as to whether that is specifically the right material for Northern Ireland. There is a draft report on an assessment of the Tim Nice-But-Dim campaign that may demonstrate to the Committee some of the responses to the use of that campaign in Northern Ireland.

310.

That, in essence, is a small part of the budget that we spend in promotional and marketing work in Northern Ireland. The majority of our promotional and marketing expenditure here is in the education sector and again that is significantly and, I hope, adequately described in our paper.

311.

The Chairperson: In your submission you say that you have £425,000 for the current year budget for international activities, but that this will reduce to £300,000 per year after that. What will the fall-off be from your list of activities? What activities will you have to cut down on because of that loss of £125,000?

312.

Mr Rutledge: There is a specific programme. A lot of that interrelates to the red meat strategy, which, again, is comprehensively referred to in the paper. There is a significant amount of promotional activity involved in that which, as that programme comes to an end, will reduce the quantum of expenditure that LMC will incur. It is basically matched funding from Government. As that programme comes to an end, so our contribution will diminish.

313.

We will clearly have to make final determination on all our budgets with regard to the available funding. If the funding that we would hope to be available is available then we will be curtailing some of that marketing. That will include point of sale promotions, cooking demonstrations, sampling in supermarkets, that sort of thing that we are currently involved with.

314.

The Chairperson: I want to ask one final question about the classification. The Ulster Farmers' Union has called for fundamental overhaul of the current rating appeals procedure to make it more user-friendly. The NIAPA representatives also said that there needs to be a system of appeals that is credible to the producers, graders and processors - perhaps an independent system. Can you add anything to the debate about this procedure further to your submission? In what ways might it be made more user-friendly or credible?

315.

Mr Rutledge: Other than to listen to specific ideas that might come from the industry, we have no particular view. We provide that service because we have been historically asked to do so by the producers and processors. The consultation of the quinquennial review, of which you have the draft, concluded that there was, as yet, no better solution to the meeting of the regulatory requirement for classification.

316.

We have an appeals procedure that certainly has some frustration expressed with it, mainly when customers require aitchbone hanging of carcasses. It basically denies the opportunity for classification of the cold carcass. The definitive classification has always under the European regulation been based on a cold carcass. If you aitchbone hang you are making the hot interpretation and therefore the appeal to the cold carcass is not available.

317.

The difficulty we have here is that customers, in specifying aitchbone hanging, are endeavouring to meet a regime to tenderise and provide what they perceive to be the best product for their consumers. We can do no other than try to assist with meeting the customers' needs. However, we understand the frustration with the carcasses which are aitchbone hung and therefore not available for an appeal. We would be happy to listen to alternative suggestions for an appeals process, but we do not see how we can achieve that.

318.

Mr Douglas: You advocate the setting of price to be placed on meat yield by mechanical means as opposed to subjective grades. If the technology were capable of such assessment, in your experience do you feel that this would be supported by the meat processors and more importantly by the farmers?

319.

Mr Rutledge: The majority of processors will not have any significant objection to this process when the technology is available and proven to a payment system based on a measurement of the meat yield. The trials performed in the Republic of Ireland that have been well publicised in the media concluded that the equipment tested was capable of making a reasonable assessment of meat yields. However, one would like to see that equipment at a higher level of sophistication - making a closer determination of value by measuring the yield of the high-value cuts. No doubt processors would seek to get up that hill. From my contacts with the processors they do not seem to have any objection in principle with regard to mechanical determination of the yield and value and a payments system built around that.

320.

Mr Armstrong: A regular in-house quality assurance scheme and regular training of staff would help to reduce inconsistencies in the classification process. What quality assurance scheme, if any, does the LMC currently operate in-house to ensure that classification officers produce consistently accurate classification of animals? Does ongoing training take place?

321.

Mr Rutledge: In regard to the classifications officers there is an initial training programme which LMC operates. Subsequent to that there is a licensing process that requires each classification officer to be subject to scrutiny by the competent authority personnel in the plants. Each one of those officers subsequently would be brought through with a review by our management. If it is found that they are drifting towards the boundaries set in the standard then ongoing training and development will take place. They are continually monitored by the competent authority, and there are between three and five Department staff employed with the sole purpose of monitoring the classification officers, which fulfils their duty as the competent authority in setting the standard.

322.

Mr Armstrong: On completion of that competence training do you then go out to the butcher to see if he is satisfied with the classification of the carcass?

323.

Mr Rutledge: We have more feedback from the multiple retailers. From time to time we will get comments from them if the yield of a Northern Ireland R3 departs from the yield that they will observe from a GB supplier. We do not have a formal process in place to determine that feedback. The classification is regulated ultimately by the European Commission. We have contact with butchers, but we do not sense that they have a great deal of complaint. However, from time to time we get comments about the standard drifting because we are not getting the yield.

324.

The Chairperson: What are the boundaries you mentioned?

325.

Mr Rutledge: There are boundaries set so that when a classification grade is put on an animal for its conformation, the officer is allowed, in the regulation, up to 20% of his classifications to be wrong. We have in the test programme and the supervision -

326.

The Chairperson: It is my understanding that the leeway in error is 20% of all cases.

327.

Mr Rutledge: He is allowed 20% of his grades on conformation to be wrong. He is allowed 20% of his grades on fatness to be wrong and still maintain his licence. There will be a monitoring process to bring him back within the boundaries where the percentage of those that are incorrect are closer to the norm. We have records that the Department will be able to present to you. Those records will show that on both fatness and conformation, our officers are drifting in the direction of the producers by an average of about 10%.

328.

The Chairperson: Is 20% not a very big leeway in error?

329.

Mr Rutledge: That is the European interpretation, Mr Chairman.

330.

The Chairperson: It is like something that would come out of Europe.

331.

Mr Armstrong: It could be the other way around.

332.

Mr Rutledge: I am not aware of any evidence of a competent authority or a European inspection showing that we had ever classified to the disadvantage of producers in Northern Ireland. It can, on a day, be wrong, but that is the regulation. That is a judgmental thing; it is a subjective thing on the boundaries between different grades. I cannot make it different. That is the way it is set up, Mr Chairman.

333.

Mr Armstrong: Will you give the producer the option?

334.

Mr Rutledge: No. We cannot. The producer is not a licensed classifier. It is required to be done by people licensed by the competent authority.

335.

Mr Armstrong: Will you give him the option to justify that his grade was lower than what he had anticipated?

336.

Mr Rutledge: Every producer is disappointed. The big producers understand the grading process and generally agree that the grades are consistent and right. They may disagree that it is harsh on them when the payment for their animal is determined by the classification. If they expected an R and it was an O+ they would be dissatisfied.

337.

Mr Kane: By how many grades was grading overgenerous in Northern Ireland, compared with other regions?

338.

Mr Rutledge: I do not know the statistics in regard to other regions. I do not understand the question.

339.

Mr Kane: As chief executive you should know the statistics.

340.

Mr Rutledge: In regard to other regions and other member states?

341.

Mr Kane: If you are doing your business you should know.

342.

Mr Rutledge: Thank you for telling me that. I do not know the statistics in regard to the individual classification officers' routines under inspection by the competent authority in other regions. I suspect that that would be private information, although I have not sought it.

343.

Mr Kane: Mr Lowe, you will be aware that the allegation of a price-fixing cartel is a regular topic of conversation amongst producers. Does the process by which you gather information for your weekly bulletin cause you to believe that there is insufficient price fluctuation between meat plants to suggest the existence of an organised price-fixing strategy between plants?

344.

Mr Lowe: Since joining the LMC in 1992, I have never been involved with an organisation that has tried to uphold integrity so well. I have never seen any indication whatsoever of there being a cartel. I have heard the talk, of course, but I have never seen any evidence of a cartel. If there were, rest assured that I, as chairman, would be the first to react.

345.

Mr Kane: Since Northern Ireland's beef has not been exported for some considerable time, what exactly is LMC's role?

346.

Mr Lowe: The role of the LMC is to attract the customers that we used to have and to keep constant contact with them to ensure that when markets are reopened to us we have still got the good relationship and product to provide to those customers. It is a very trying time, but we are on top of it.

347.

Mr Rutledge: We should add to that that, of course, we have continued to have a lamb export trade. So it is important not to forget that a significant proportion of lamb processed in Northern Ireland is exported and has continued to be exported through the years since the export ban.

348.

Mr Kane: Why are women or farmers' wives not appointed to the board of the LMC? Is this a perceived oversight on your part or is it another quango?

349.

Mr Lowe: It is the Minister of Agriculture and Rural Development who has the authority to appoint board members.

350.

The Chairperson: So you are not anti-women at all?

351.

Mr Lowe: I would be delighted if we had excellent women on the board. Indeed, if we achieve our ambition to increase the number of board members from seven to nine, I would be singularly disappointed if there were not more female members.

352.

The Chairperson: Is it the Minister who appoints?

353.

Mr Lowe: Yes, the Minister appoints.

354.

The Chairperson: Would you object to a sectional interest in the meat businesses - either producers or others - having the right to nominate to the board?

355.

Mr Lowe: That might take away from the independence of the commission. I suggest that it would be the subject of a consultation process.

356.

The Chairperson: Would you be opposed to it?

357.

Mr Lowe: To date I have seen no necessity for it. I am convinced that we now have the strongest commission ever. It is certainly the strongest since I was appointed.

358.

Mr Bradley: In 3·2 of the classification section you referred to a small number of producers and commentators giving sporadic abuse to the LMC and its staff because of their unwillingness to accept classifications. Do more producers complain than actually make an appeal to a senior officer?

359.

Secondly, regarding beef, how many purchasing grades and how many selling on grades are there?

360.

Mr Rutledge: There are a number of aspects to that. The number of appeals and complaints tends to reflect the price circumstances. When prices begin to fall in the marketplace, the amount of appeals increases. When prices are stable there are fewer appeals.

361.

Mr Bradley: Can you clarify that? Have you figures relating to complaints as opposed to appeals? What percentage of complaints are followed through to appeal?

362.

Mr Rutledge: An appeal is a formal process, and I am not necessarily drawing a distinction between an appeal and a complaint. A complaint is what we read about in the papers, and we may or may not have had an appeal from the person who is complaining in the media or elsewhere. The formal measure that we have of the number of producers who are unhappy with a grade is the level of appeals that we receive.

363.

Mr Bradley: My second point was about the number of purchasing grades as opposed to selling-on grades.

364.

Mr Rutledge: I do not know the number of purchasing grades. The majority of our product is purchased by the premium supermarkets. They are the most important customers, and the majority, by value, of what we sell is purchased by the premium retailers. They tend to specify E, U and R grades. Fatness levels 3 and 4L are the main purchasing specifications that we are formally asked for. Beyond that, it is more the determination of the value of the meat yield. That is mainly for customers who are buying red meat. They may buy more expensive cuts, but much of the meat will go for mincing to the burger trade, as will cheaper cuts from prime animals. In the beef industry about 50% of the value is product for mincing - from those grades that fall below the prime specification. The parts of the animals which are prime specification but not prime cuts are used for mincing.

365.

Mr Bradley: We seem to have 10 different grades that we pay out on and two grades that we sell on.

366.

Mr Rutledge: While customers will specify a range of grades that they want, they do not necessarily pay for U3 or R3. U3 to R3 is a measure of the yield and the value in the grade range that they want to buy. A supermarket will not just buy in R3; it will buy a range of grades.

367.

Mr Duffy: It could be argued, in the grading system as it is structured now, that the price being paid for cattle at the top end of the scale is too little vis-à-vis the price being paid for cattle at the lower end of the scale, which is too high. There is no formula to justify the present structure or the differences between the grades down to the last 3% or 4%. That is why this old classification issue is a very emotive one. Also, our farmers are not happy with the appeals procedure. If it could be replaced with something on an objective basis, that would be welcomed by all parties concerned.

368.

The Chairperson: What do you think about the 20% margin of error? Would you employ someone who could err up to a level of 20% and could still remain in employment?

369.

Mr Duffy: Definitely not.

370.

The Chairperson: You certainly would not do it in politics. You would be out through the door if you did.

371.

Mr Duffy: I could not afford to have errors of 20%.

372.

The Chairperson: It is an amazing figure.

373.

Mr Rutledge: It is to do with the subjectivity involved in the exercise. It is not a precise science. It is based on skill and judgement. We would be in severe bother if the European Commission found that we had an actual error level of 20%. It would not tolerate that.

374.

The Chairperson: It is not skill if you can have a 20% margin of error. A skilled man should be within 3% or 4%. The bone of contention among farmers is this classification and how it works.

375.

There is hardly a farmers' meeting where the issue is not raised. It is not raised in a nice way, but in a rugged Ulster way which shows how mad people are about it. If you were to argue one way, they would say that you were taking sides with those carrying out the classifications. I should have thought that if a man were skilled his margin of error should be less than 20%.

376.

Mr Rutledge: Indeed, they are. I described to you what the regulation permitted - I believe that was the question asked. I have answered by telling you what the regulation says. Our people are classifying within a margin of about 10%, but it is our policy - and perhaps I omitted to mention that this is agreed across the industry - that the producer be given the benefit of the doubt. When the European Commission team comes over, it does not want to do that. However, we do so, and it is agreed with the processors and the producers' organisations that we accord the producer that benefit when it comes to the boundaries between classifications.

377.

The Chairperson: Mr Rutledge, I would take you on before farmers any time and put forward the proposition that it is not to the benefit of the producer, because the farmers do not believe that it is. The perception is that grading is so subjective that it makes a proper, reasonable finding impossible.

378.

Mr Rutledge: I can only agree. We have our own producer meetings, and it can be very difficult, for we are "piggy in the middle". We provide a service to the best of our professional competence. If there were a better solution, we would be delighted to find it. There is a European regulation, and the service that we provide must operate within its constraints.

379.

Mr Dallat: With "bones of contention", "piggy in the middle" and my mind firmly fixed on the survival of Phoenix, I am not sure that I should ask questions at all. Given the importance of such gradings as E, U, R, U3, R3 and 4L, can you explain, in the context of your promotional activities, what they mean to the housewife visiting the local butcher? I emphasise "the local butcher" rather than the large supermarket, for which I have no time. How do the grades enhance the Northern Ireland product? In what way do they help to market it better and give it more added value than an import from South America? We have spent months arguing about grades, yet I have never once experienced them as a consumer, nor would I be able to understand them if I did. My question may sound frivolous, but it is absolutely genuine.

380.

Mr Rutledge: I appreciate the background to your question, which is by no means frivolous. Ultimately the grades should - and do - relate to the consumer, for they determine such matters as the size, shape and fat content of a steak bought across the counter. Therefore if a professional retail butcher has a prime customer base for which he must have a consistent product of a particular size, shape and weight, he will source to meet customer demand. That is how the grades ultimately reflect back to the consumer.

381.

Mr Dallat: In that context it is all the more surprising that you state in the report that your promotional activities may be curtailed because you are strapped for cash. I find it difficult to separate your two functions. How can you grade meat to reflect the preference of the Northern Ireland consumer while possibly facing a future where you are no longer involved in the promotional activity to deliver what you have identified on the production line?

382.

Mr Rutledge: We want to have an industry with the maximum number of prime grades - E, U and R are what our premium customers want. By interfacing with producers we seek to encourage and help them in every way possible so the maximum percentage of meat from the farms achieves those grades.

383.

If we find a prime customer - name any multiple retailer - it will want Es, Us and Rs. We want to promote Es, Us and Rs because we want to provide what the prime customer is going to pay for. We want that income for our industry. I do not know if that answers your question adequately, but that is how the two aspects ultimately interrelate. As the proportion of the bovine population attached to the dairy herd increases, we have a problem because we cannot produce a high enough percentage of the Es, Us and Rs. Therefore we are moving in the direction of producing - and fighting against having to produce - more and more commodity product for mincing.

384.

Mr Ford: You will be pleased to know that I am not going to talk about grading. In relation to the funding of the organisation, you highlight money that is available to An Bord Bia, to Welsh Beef and Lamb Promotions Limited and to Quality Meat Scotland. There is an implication in your submission that there should be similar funding from the Department of Agriculture and Rural Development. Have I taken the implication correctly?

385.

Mr Rutledge: We have tried to give a full reply on that particular aspect. There are difficulties at two levels. First, there is the difficulty that Governments in Europe giving money to organisations such as ours will have to have European state-aid approval for that. That can be difficult, but, given the experience of our colleagues in the Republic of Ireland, it would appear that there are means of doing that. They have a national development plan under which they are able to provide substantial funding. My recollection is that, out of a £20 million budget, some £14 million comes from Government in some form or other.

386.

The second problem is obviously a Treasury and Northern Ireland Budget problem. If money is to be made available to our industry, will someone else have to suffer? It then goes into the realm of politics as to whether it is justifiable to provide funds to us to assist in the promotion of beef and sheep meat.

387.

Mr Ford: Given the financial difficulties that you are going through at the moment in reducing the balances that you currently hold, and given the financial problems that primary producers have, if there is not state funding what activities will the LMC have to cut back on?

388.

Mr Rutledge: There are a number of facets to that. We had outlined in our strategic plans that we were going to deal with two of three significant problems. The three significant financial headings are levy income, farm quality assurance and classification. We have, over the last year, as we described to you, successfully introduced an income from the processing sector. The primary slaughterers are providing a voluntary contribution to LMC. We have almost completed an agreement on farm quality assurance scheme funding. We may be able to get that introduced quickly. We had hoped not to have to deal with classification this year. It is tough enough for producers to have to deal with the farm quality assurance scheme funding. Our strategy was built around our not having any additional levy income or any uplift in the classification until next year.

389.

The current foot-and-mouth disease outbreak does have some implications for LMC in that we are not generating as much income as we had budgeted. The problems of the industry created by foot-and-mouth disease are far more important than our little problems, but it is only appropriate to say that our budget may be affected by a shortfall in income arising from the knock-on effects of foot-and-mouth disease. Our plan may be thwarted to some degree.

390.

On cutting back on our activities, our biggest expenditure item is promotion and marketing. That is the one that we can most readily cut back on. Our information services cost significantly less, and farm quality assurance, which is the other major activity that we are involved in, is more or less being sorted out.

391.

Mr Ford: The report seems to agree with the idea of increasing the commission's total board membership. I am keen to hear the views of the board as a whole on that; I am particularly interested in what Mr Mark or Mr McCoy might say regarding the balance of interests if there were to be an additional two members.

392.

Mr Mark: If, as the quinquennial review suggests, we extended the commission's board to nine members, it would allow farmers' interests to be further represented by at least one additional player, giving them a proportion of three out of nine members, as opposed to two out of seven. That would go some way towards allaying the industry's perception that it is underrepresented. I feel that the current membership of seven gives farmers adequate and well placed representation. A further expansion to nine members will allow the board to remain manageable while also allowing a greater diversity of opinion from a broader spectrum of the Province's agriculture industry.

393.

Mr McCoy: The perception means a great deal in our industry and in Northern Ireland at large. The recommendation from the LMC board to increase its membership to nine reflects the perception among producers that there should be more representation. I concur with Ian Mark that running the LMC is a larger business than it simply being a producer-owned organisation. There are other issues, and the diversity of expertise and experience which comes to the board must always be respected.

394.

Being a member of the LMC board is an onerous task, for there is a fair amount of material and debate to go through, but I contend that having more producers on the board would lend it greater breadth. However, it cannot be overlooked that other individuals might bring complementary experience.

395.

The Chairperson: Mr Mark, what do you think about the 20% margin of error?

396.

Mr Mark: Mr Rutledge has referred to the fact of the European regulation. The difference with our operatives within the classification is that the actual difference he quotes - 10%, 5%, 4% or 9% - is still subjective, in that we put forward our grades and classifications for another subjective examiner to look at. The examiner then expresses a view that 10% or 9% or 8% are wrong. None of us is any better qualified to say whether he is more correct than the original examiner. The actual statistic quoted does not necessarily reflect what is happening on the ground on a given day.

397.

Mr Rutledge is absolutely right that there is no evidence whatsoever - and in all my time, both as a farmer and on the commission, there was no evidence - to suggest that any variation allowed on grading has not benefited the producer. If there is a debate in the classifier's mind about whether an animal is potentially an R or an O+, he awards it an R. One can argue that he is wrong or right to do so, but he will never give an R-grade bullock an O+ because he is in two minds.

398.

The Chairperson: Mr McCoy, what is your attitude?

399.

Mr McCoy: I should use the analogy of the 20% parameters. We all drive on roads that are wider than our vehicles. I take the chief executive's point that the commission's classification officers try to direct their assessment of the carcass within the 10% to maximum competency.

400.

In saying that, however, it is particularly difficult for me, as a farmer, or for anybody else. Not many people are competent to grade an animal live in the field, and then to grade it "undressed", with its hide taken off and hanging on a hook. There is therefore a discrepancy in some farmers' belief of what their animals were capable of achieving. In some ways, the livestock ring was always the best place to assess the net worth of the animal, because people were competing. In this case, the animal has been slaughtered, and it is hanging on a line. Human nature is not always correct.

401.

Mechanical classification is something which we should seriously consider in Northern Ireland to achieve a better system of payment for the farmer's produce. It should not depend on the existence of an EUROP classification based simply on the shape of the animal. It should be based more on the content and quality of the beef.

402.

Mr McHugh: The last time that we met there was some contention over whether farmers were satisfied with what the LMC and the meat exporters were doing on their behalf. I was almost told that I was a liar for saying that they were dissatisfied. Mr Rutledge said earlier that 100% of the people cannot be satisfied 100% of the time. The farmers, however, would be far away from 100%. At present, we do not have the marts, and there is very little competition in what the farmer can get. He can only go to the meat plants. I wonder how well the farmer is doing at the moment.

403.

In representations to this Committee, farmers have told us that they are not satisfied. Something, somewhere, is wrong with the system. If that is happening, the overall aim should be to have the best quality produce to sell and to export. We have not been able to achieve that over the last few years. The analogy is made that the larger farmer's understanding of the grading system, and the expectations from it, works to his advantage. All others are then almost incompetent in presenting animals. It therefore works to their disadvantage. I would contend, however, that one of the key factors which makes people move towards quality is the returns by way of pounds in their pockets. Farmers would say that that has not been happening on their side.

404.

The role of the LMC was one of the factors which we considered in relation to the profit reports and reports prior to this one. In relation to your aims and objectives for the next few years, what can you do, post-foot-and-mouth disease, to move to a different position in the relationship between the farmers and yourselves to achieve quality through returns to the farm? I do not think that it can be achieved in any other way. People will say that the subsidies have been a blockage, and that if farmers are being paid subsidies they will not necessarily produce the right animal. I do not believe that. If the farmers are getting the right returns from the meat plants or mart rings, they will come up with the goods. That must happen. We cannot afford to be in a position where we have a whole level -

405.

Mr Rutledge: I would agree with much of your comment. The first point you made was on the present situation.

406.

The Chairperson: I hope that you did not agree with the first part of it, because it was a criticism.

407.

Mr Rutledge: Thank you. Looking at the question, and the debate which Mr McHugh raised, the current situation - interestingly - demonstrates reasonably well that supply, demand and quality are driving prices. We saw in the early stages of the foot-and-mouth disease crisis in GB that there was a dearth of product. Northern Ireland product moved more freely. There were some weeks when the Northern Ireland price was virtually the same as the price in England and Wales.

408.

Great Britain is now slaughtering the majority of cattle that come forward, so that situation is being redressed. It is hard to get figures at the moment because everything is very disrupted; however, we think that the average price in Northern Ireland today is between 5p and 10p per kilo less than the price in GB. Two weeks ago the prices were almost equal. That is what the market is giving to the farmers.

409.

I agree with much of what you said about the issue of quality. It is in the interests of everyone to take whatever steps are possible to address the quality issue. Several initiatives have been talked about, the Department is working on some proposals, and there are some proposals being considered by the commission, to start initiatives to improve the quality again from the breeding herd into the commercial herd. The LMC is participating in that, and we are contributing towards it with our own resources.

410.

We have a specialist beef industry that, for the most part, continues to produce a very good product. There has been some slippage for a number of reasons - one of which might be the brown envelope. One of the problems is the commercial return that is available. People are not properly finishing cattle, for example, because they do not think that the return is good enough. Cattle are sold on when the farmers get their beef premium. We have to fight against that.

411.

There is also the increasing influence of the dairy herd. There has been a significant migration of milk quota from GB, and that is putting a dairy influence on the raw material that we have for our specialist beef industry. That presents everybody with difficulties, but there are things that we can do to improve that. We have spoken about creating a specialist bull business. There are efforts being made to produce specialist bulls as a dairy by-product.

412.

There is also the issue of getting a proper genetic mix, so that the dairy cow can produce a reasonable beef calf. There are things that can be done, but it is a continual battle to keep the quality high. The quality is determined by the grading classification.

413.

The Chairperson: We will have to leave the issue there, because we have run out of time. I thank the members of the LMC for coming along today and for helping us with the inquiry. There were some questions that we would like to have had time to discuss, but we will send those to you, if you would be good enough to reply to them. We do not want to dilly-dally over the investigation - we want to get the results out as quickly as we can.

MINUTES OF EVIDENCE

Friday 4 May 2001

Members present:

Mr Savage (Deputy Chairperson)

Mr Armstrong

Mr Bradley

Mr Dallat

Mr Douglas

Mr Kane

Mr McHugh

Mr Paisley Jnr

Witnesses:

Mr C Duffy )

Mr C Mathers ) Northern Ireland Meat Exporters'

Mr R Moore ) Association (NIMEA)

Mr C Tweedie )

414.

The Deputy Chairperson: You are very welcome. Before we begin, I must respond to a comment you made in the second paragraph of your submission on Livestock and Meat Commission (LMC) funding. You expressed concern that the Committee's inquiry was a duplication of the Government's five-year review of the LMC and that such double expense was not a good use of the public purse. I assure you that there is a big difference between a review that a sponsoring Department is required to carry out and one undertaken by a Statutory Committee set up under the Northern Ireland Act 1998 with powers to initiate inquiries and make reports.

415.

The Committee's inquiry is focused on four main issues of concern to Members and their constituents. Members of this Committee are directly accountable to their constituents. This inquiry is, therefore, entirely separate from that carried out by the Department. However, the Committee recognised that the five-year review had taken place and referred to it in its Terms of Reference. The Committee will take that into account as it prepares its report.

416.

On a different subject, I would like to ask Mr Duffy whether he believes there is any conflict of interest in his appearance today as a representative of the Northern Ireland Meat Exporters' Association (NIMEA) and having appeared last week as a member of the LMC.

417.

Mr Duffy: Absolutely none.

418.

Mr Mathers: Your letter to us referred to Government funding of the LMC. That was news to us. It was a useful comment, as it focused us on the source of funding for the LMC in comparison to similar meat promotion bodies in regions which are direct competitors. A previous Administration created the legislation under which the LMC operates and gave it a means of funding outside the Government purse. To date, all promotion of Northern Ireland beef and lamb products has been run by individual processor investment in conjunction with the LMC.

419.

The issue is timely, as we believe that as in every other region of the United Kingdom - and the other EU states - there now needs to be the same level of Government support for the promotion of these products as exists elsewhere even on this island. If we are to compete in the markets available to us, Government- assisted promotion similar to that which our competitors enjoy is essential.

420.

Secondly, we would like to draw your attention to the loss of LMC levies due to smuggling of sheep. The disposal analysis of Northern Ireland lamb production has shown that for many years, at least 500,000 lambs a year have been marketed as unrecorded exports to other parts of this island. Those lambs have been moved South in such a manner that they evade the LMC statutory levies, thus depriving the LMC of much- needed promotional funding.

421.

Over the years, NIMEA has raised the issue of illegal sheep movements to the Republic of Ireland with the Department of Agriculture. It also wrote to the Revenue Commissioners in Dublin in 1994. It is interesting to note that it is movements of sheep between Great Britain, Northern Ireland and the Republic of Ireland that have caused the present foot-and-mouth disaster on this island. For that reason, we propose the introduction of a transaction levy, similar to the scheme in Australia, whereby the LMC would draw levy funding from sheep every time they pass through market.

422.

My third point is that, as you are well aware, the whole area of classification and the LMC has been given some airing. Classification is a statutory EU requirement with which all member states are obliged to comply. When the Government decided to privatise the classification service in 1990, the industry was forced to seek an alternative body to perform that function. The entire industry requested the LMC to take on the function, as it was deemed the one single professional classification body across the country. It gave uniqueness to Northern Ireland and had a better chance of delivering a provincial standard.

423.

The LMC performs this service under the supervision of the competent authority, which, in our case, is the Department of Agriculture and Rural Development. In hindsight, the performance of this service by the LMC has resulted in it being maliciously scandalised by various groups. As a result, we are concerned that the LMC's promotional independence has now been tarnished as well. It has been forgotten that all parties in Northern Ireland requested the LMC to perform this function, even though the EU allows each plant to put their own classifier in place if they wish. If that were to happen in Northern Ireland there would be 11 classification bodies rather than one.

424.

It should not be assumed that if the current situation were changed, all plants would simply transfer to any new body. Is it not better to have one body across the Province doing the job to a single monitored standard rather than a plethora of bodies trying to operate a national standard?

425.

My next point is on the business of unco-ordinated promotion. It is our opinion that some Government and other agencies - for example, the Department of Agriculture, IDB, LEDU, and rural development authorities - are doing what we can only describe as unco-ordinated promotion in respect of the meat industry. Some District Council activities have also involved such promotion. On occasions this has embarrassed some of our premium customers.

426.

It is our opinion that there should be one single spearhead promotional body in respect of the beef and lamb sector, and that it should be under the umbrella of the LMC. That would ensure that a much more efficient and fruitful use of resources would be made. It is absolutely essential that Northern Ireland has an independent, professional promotional body to match those of our competitors in these islands.

427.

The LMC must become the driving force to spearhead quality initiatives and investigations into the branding of Northern Ireland beef and lamb. The LMC should also collate the available data to harness the knowledge gained through the farm quality assurance scheme and to make realistic forecasts on the availability of quality raw material for the industry to market.

428.

Armed with that type of information, the processing sector can perform a marketing function directly related to production, thus being more efficient and adding real value back down the chain. Currently, nobody can tell either the number of quality cattle or sheep available for any given time ahead. Only an informed guess can be made, therefore, in relation to the availability of quality raw material.

429.

In the age of electronic data interchange, that is surely a severe drawback to the entire marketing programme for beef and lamb from Northern Ireland. It is therefore essential that Northern Ireland has a professional and properly funded beef and lamb promotion body to ensure that the industry can match the activities of its competitors in the UK, continental and - it is to be hoped - world marketplaces.

430.

The Deputy Chairperson: You said that the LMC should have control of all promotions in the meat and lamb sectors. Can you describe the areas currently covered by the Department of Agriculture and Rural Development, LEDU and IDB? Why, in your paper, do you describe this as "meddling"? Can you give specific examples?

431.

Mr Mathers: Moneys are available through all the bodies I mentioned for the promotion of meat or lamb products, either in the UK or in other EU states, but there is no co-ordination. All of that does not work together in one spearhead to the direct benefit of all of Northern Ireland. Everybody does their own wee bit in relation to their own area, but it should be spearheaded, collated and pulled together in one driving force that represents Northern Ireland.

432.

Mr Duffy: The LMC is at the forefront in promoting Northern Ireland produce. It understands exactly what is required in relation to quality and what the customers want, along with the people who sell the produce. There are divergences as you go down the chain with the other agencies we mentioned. Co-ordinating those divergences and making sure that there is a focus on value for money is important. That also applies to research.

433.

The Deputy Chairperson: You said that the levy should increase from 80p per head of cattle to £3. When producers are already experiencing low or no returns, how do you expect them to pay this additional levy and still make a profit?

434.

Mr Duffy: The LMC requires enhanced funding. There are a number of options, and we suggested some of those. You only have to look at how similar bodies elsewhere - in England, Wales and other countries - are being funded. The main issue is that the LMC is underfunded. To be able to seriously compete with other bodies, for example An Bord Bia, it must have an enhanced funding portfolio.

435.

The Deputy Chairperson: It is easy to say that they must be competitive, but if the farmer in Northern Ireland is not getting a reasonable return, or, indeed, getting no profit at all, there will be no farmers here to compete with. They have come through a difficult patch. If there is going to be a levy increase, somebody somewhere along the line must bear the brunt of it.

436.

Mr Duffy: Yes, but if we do not continue to promote then the return will be even lower. We have a product that we have to promote on world markets. If we draw back from that just because there is an impending deficit in the LMC budget, it does not mean that we have to cut back. We should actually be trying to increase promotion, with greater emphasis on certain areas. The formula for where the money is found is a matter for further debate.

437.

Mr Dallat: The LMC's gross income in 1998-99 was £2·46 million. What would be an appropriate funding level for the LMC?

438.

Mr Duffy: You have to look at the markets, where they are going and what they are competing against. It could be five times the 1998-99 figure and still not be enough. You have to focus on value for money and what your competitors are doing. It is very hard to quantify the exact size of that. There are definitely more funds required.

439.

Mr Dallat: For what?

440.

Mr Duffy: Additional funds are required for promotion of our produce on world markets. You say that the figure is £2·4 million. However, if the funding is increased, which it has to be, it is for the LMC to look at that and to spend that money wisely and in accordance with the demands that are placed on it.

441.

Mr Bradley: One of the recommendations in the quinquennial review is to have annual reviews of the LMC levy, in consultation with producer and processor organisations. Do you think that a possible annual variation in levies would affect strategic promotional planning for the LMC, due to the variable income each year?

442.

Mr Duffy: It would be advantageous if it could be reviewed annually to take account of competitive factors in other countries. It is a very competitive market. The LMC has already said in its submissions that it is operating on a very small, tight budget.

443.

When you see what is being thrown at other retailers in these countries and the funds that are made available to the LMC's competitors, you realise how hard this situation is. The answer to your question is "Yes". I think that it would be a good thing to review the levy annually.

444.

Mr McHugh: The question of whether the LMC is providing value for money and so on is an ongoing debate. If I remember correctly, the last time we met with NIMEA we found ourselves on the receiving end of a list of questions from you, rather than vice versa. You may have caught us on the hop that time, but I think we have learned a few things since then.

445.

The reason we are inquiring into these things is that from our point of view, LMC's intention or purpose is to deal with classification and to try to be part of an industry that should be working in terms of our markets. When you talk about our competitors, I wonder how much of an impact we or the LMC are having on the market. Currently, farmers are inclined to say that they are not exporting anything anyway. What is the money being spent on now, and will there be any difference in the future?

446.

You mentioned factors like the movement of sheep from Britain as being the cause of foot-and-mouth disease. I contend that while smuggling may well have been the end result, it is only a symptom. Smuggling is going on because farmers are not getting a fair price elsewhere. In any case, that is how they see it.

447.

The meat plants are now in a situation where they do not even have marts to value their cattle. They have no outlets at all. We have seen lamb prices go through the floor in the last couple of weeks. Farmers are, therefore, up against the wall as primary producers. They are not seeing a lot of return for £35, or whatever considerable amount they have to pay. That is happening on an ongoing basis, so they are not seeing value for money; they are not seeing us impacting on the worldwide markets. Besides those set markets that have had to deal with us over the years, we must question whether we have impacted on the European market, for instance, even before the BSE or foot-and- mouth crises hit the industry.

448.

Fall-out from BSE is still a reality, although it is hidden behind the urgency of the foot-and-mouth situation at the moment. Can you tell us what you are going to do in the future, in terms of the LMC, when we get foot-and-mouth out of the way?

449.

My other question regards appointments and conflicts of interest. I think that there is a conflict of interest if people are seen to be more on the side of the producer. Indeed, from Mr Duffy's point of view it is almost necessary to have expertise in light of that. Certainly the primary producer thinks that there is a conflict of interest there. Indeed, one farmers' representative has been quite closely involved. Farm leaders should be independent, as should those who do that business and work on an LMC board as well.

450.

Mr Duffy: There were a number of questions there.

451.

It is unfair to say that the LMC had made no contribution to the European markets or, indeed, to the value that the producer was getting for his beef in Northern Ireland pre-1996. Prior to that year, Northern Ireland prices were probably the highest or second highest in Europe. You only have to look at the Albert Heijn business; all our members should be aware of how successful that was. I was not involved in that. However, from my previous experience in industry, I could see that it was definitely a very enviable position to be in. Northern Ireland's competitors were very envious of that. The facts bear that out.

452.

As for the question of whether the LMC is currently providing value for money or not, I was fortunate enough to be here last Friday when the LMC made us aware of how funds were being spent. Its submission made it clear that given the limited nature of those funds, it has already put a greater emphasis on the local market in educating the consumers of the future, namely young people.

453.

It also outlined its strategic alliance with the Meat and Livestock Commission (MLC) in ensuring that we keep a British label on our meat in Northern Ireland. You only have to look at the price differentials between Northern Ireland and the Republic of Ireland to see the success of that campaign. That does not take into account the promotional and marketing funding that has been contributed directly from the processors to the retailers in order to move the disproportionate amount of meat coming out of Northern Ireland that traditionally went to the European market.

454.

The LMC is currently working on identifying particular niche markets around the world, because we are a very high-cost producer of red meat. We have to identify niche markets. It already has one, and it has held on to the Greenfields brand to ensure that there will still be a premium place for Northern Ireland meat in that market. The LMC is identifying other markets. When those markets open, it will launch an attack with the increased funding that it will hopefully have at its disposal. That should work its way down through the chain.

455.

I sit on the board of the LMC and I am chairman of NIMEA, but that is not a conflict of interests. It is probably coincidental and it is not of my making that I want to take on those workloads, but it helps to bring greater focus. We can make decisions without having to go and consult and then come back again. We can make some very quick suppositions at board meetings on some things that are happening in the industry, like Miceal McCoy and his role in the Northern Ireland Agricultural Producers' Association (NIAPA). It is purely coincidental that he is now sitting on the board. I see it as an advantage, not a conflict.

456.

Mr Mathers: Mr McHugh said that the levy was £35; in fact it is 80p per head.

457.

Mr McHugh: I did not mean £35 per head. With regard to classification, I was saying that farmers were not happy with the way things were going for them the last time.

458.

Mr Duffy: Naturally they are not happy, because their returns are lower. When prices start falling for a number of reasons, appeals, et cetera, will rise. You have to look at what happens in the market in Great Britain. Most of you are probably aware that some meat plants pay for their own grading service. If that were to happen in Northern Ireland there would be uproar.

459.

My company's experience is that in a slaughtering of, say, 300 cattle in a day in England, 10-15 producers would be involved. One or two of them, or maybe none at all, would come to see their cattle being graded on that day by someone who has been employed by a grading service or directly by the plant. It is a task that the LMC is unfortunate to have in its remit. I cannot see any other way of having a standard that is as independent as it is at present. Unfortunately, it is very controversial.

460.

Mr Moore: Mr McHugh said that one of the purposes of the LMC was classification. The last purpose that the LMC would ever identify with is classification. It was asked to take the service on, but it would be delighted to be rid of it. It is providing a service that can only attract criticism. It will never attract praise.

461.

Mr McHugh: What is the purpose of the LMC?

462.

Mr Moore: Its purpose is the promotion and expansion of the industry. The classification service was something that it was asked to take under its wing, and it has administered it credibly. In criticising the LMC, its visible activities in Northern Ireland, other than keeping farmers happy, are irrelevant.

463.

Visibility in our markets is important. The fact that farmers do not know what the LMC is doing is not the issue. The issue is what the LMC is doing for the customers - the customers being the buyers of our product. That is where the achievements lie, and they are the people who should be giving their opinions.

464.

Mr Douglas: Although you say that NIMEA members are happy with the classification service provided by the LMC, you also say that it has not been as consistent or rigid as the service provided by the Meat and Livestock Commission (MLC) in Great Britain. What do you mean by that? What aspects of the MLC procedure could the LMC adopt in order to improve the service?

465.

Mr Duffy: There is definitely a problem in England surrounding the grading of cattle. England has a tighter form of grading than Northern Ireland. Hence, when the quality in the bands is compared directly, it is more advantageous to bone an R3-graded animal in England than in Northern Ireland. As the Chief Executive said, the difference is that the benefit swings towards the producer in Northern Ireland. The facts are there to bear that out.

466.

Mr Douglas: Should the grading in Northern Ireland be in line with that in Great Britain?

467.

Mr Duffy: Yes, but it will be harder on the farmer.

468.

Mr Paisley Jnr: I have sympathy with Mr Moore. He said that it is very easy to oppose the LMC and to give it a good kicking, but it will be very difficult to put something in its place. We have already seen as much in the evidence that we have received from other organisations, and we are examining that.

469.

Mr Mathers rightly said that illegal sheep movements are causing a great number of problems. It would be helpful to any future assessment of foot-and- mouth disease if NIMEA could produce the paper trail to establish the warnings that it gave to the Department of Agriculture and Rural Development, the Ministry of Agriculture, Fisheries and Food (MAFF), the Irish Republic and other organisations, well in advance of foot-and-mouth, about how illegal sheep movements could spread the disease. We are often told that hindsight is a wonderful thing. If you can produce evidence of foresight, that will be most welcome. It may open some people's eyes about the situation and give us the opportunity to ask different questions.

470.

Classification is causing problems for many people. Should the LMC look at finding alternative methods of classification, and should Government money be directed to that? Moy Park has developed an electronic classification scheme in the poultry sector that is speedy, efficient and cost-effective. Is there room for development there? What progress should the Government make to put in place such an efficiency drive?

471.

Secondly, do you agree that the figure of 20% wrong classifications is astounding, even though it is a European regulation? Do you agree that that should be reduced to, at most, 5%? If you had an electronic classification scheme, would you agree that you could get down to a 5% inaccuracy level? Would there be any benefit in carrying out a classification on the hoof and a classification on the hook, and then coming up with an overall classification? Would that result in a more accurate classification? Finally, do the producer, processor, retailer and consumer get value for money from the work done by the LMC?

472.

Mr Duffy: The LMC should forge ahead with developing an electronic grading system, and it should form a strategic partnership with an organisation that is pioneering and doing a lot of work in that field. It would be almost impossible for the LMC to independently fund it, but it would be beneficial if the industry got together on that issue. However, a lot of work is being done and phase one is up and running.

473.

A number of countries and organisations are spending a lot of money in that area, and it would be good if the LMC formed a strategic partnership with them. Funds will be required to obtain the latest technology, and NIMEA would be willing to operate those trials in its plants.

474.

Mr Mathers: As far as I know, I am the only person outside the Department of Agriculture and Rural Development and the LMC who has ever held a classification licence. Since 1990 I have been the only person on the island of Ireland, as far as I am aware, who is a registered meat surveyor with the international meat trade.

475.

As I have an interest in the automation of carcass classification, I went to Spain last year to follow it up and to see what is going on there. Carcasses of sheep, pigs and poultry are pea-in-a-pod carcasses. They have similar size and weight, et cetera. However, cattle have carcasses ranging from 190kg to 450kg and there is no classification equipment more accurate than the human eye.

476.

Mr Paisley Jnr: Is that to do with bone density?

477.

Mr Mathers: It is to do with everything, because the carcasses of beef animals are so diverse.

478.

Mr Paisley Jnr: I understand from Moy Park that its X-ray machines give bone density and fat content and that classification can be deduced from a photograph. However, I know that comparing poultry to beef animals is like chalk and cheese.

479.

Mr Mathers: You are talking about a 2 sq ft photograph compared to something that is 8 ft or 9 ft long and 3 ft wide.

480.

Mr Moore: The genetic diversity of a beef herd is as great as that in the human population. The genetic diversity in pigs or poultry is minuscule.

481.

Mr Mathers: The European report on mechanical classification stated that none of these machines would be likely to meet the proposed criteria for authorisation of mechanical systems by the EU. All the machines can classify, but none more accurately than the human eye. In a few years' time there will be more accurate machinery. Technology will advance and allow for that. When that happens, there will be nobody happier than the meat industry in Northern Ireland.

482.

About 90-92% of all cattle fall into a box on the grid without any dispute. The remaining 7-8% are borderline cases. They have two or three points that would recommend them for a higher grade, but they also have two or three points that would pull them into the lower grade. That is where the classification skill comes in. The error rate is 20% of that 7-8%; it does not refer to 20% of all cattle graded.

483.

Mr Moore: I have no problem saying that the LMC provides value for money. We have dealt with other promotional bodies in other countries at times. Going back to the original point, I am basing my judgement on the customer's opinion of the independence, integrity and the foresight of the LMC. I am not basing my judgement on my own opinion. I have seen the response of customers. We should send them out on their own to certain markets. In many cases, the LMC's foresight in developing and sticking with the farm quality assurance scheme without farmer support has been instrumental in winning a return that would be less today. I have no problem in saying that it currently stacks up well against any other international body. That is the opinion of some of the most significant customers of the industry. A service is being provided.

484.

Mr Tweedie: I will not say that the LMC gives 100% value for money, because no one does. I do not know whether the £2·4 million going in to the organisation goes out again, or whether they should have nine instead of 10 members - that is an internal thing. I know that underfunding has created a few problems. In the South of Ireland, a lot more money goes toward the promotional fund. Approximately £2·30 per share goes into the Meat & Livestock Commission (MLC) promotional fund in England, and in the South of Ireland it is over £1. We have more money.

485.

We supply meat to supermarkets. About two years ago we were giving them a lot of mince. Then they said that they would not be buying any of our mince for two weeks. Why was that? Was it to do with our prices? They said "Yes, but MLC is giving special promotions, therefore we have to sell all the meat from the mainland." I had a big problem with that. We had to put up the money out of our own pocket and pay that funding. That was because the MLC had more funding. It is hard for supermarkets to give value for money if they do not have the money to spend.

486.

The money put into promotional funding in the Republic and in GB is much greater than in Northern Ireland. As Mr Mathers said, we need a pointer. The funding should be put into one pot so that supermarkets can promote our goods and make us strong. In recent years we have been tied in with MLC, and probably half a million of that £2·4 million that comes in goes out every year to the MLC. Therefore, we are now part of the promotional work in the mainland, into which much of our business goes.

487.

The LMC loses a lot of levies through those half a million sheep that are being smuggled every year. I do not believe that they have been smuggled because of a lack of money, as Mr McHugh said. They are being smuggled because of a VAT and levy advantage. We have had a bucket here, and that bucket has had a hole in it for several years. Half a million sheep have been pouring out of that bucket into the South of Ireland.

488.

In the past we have not had enough lambs to supply to our customers in Northern Ireland, and therefore we have brought lambs out of England into Northern Ireland. That smuggling has caused foot-and- mouth disease (FMD). If those lambs had not been smuggled down South, we would have had enough raw material to avoid having to bring lambs out of England. Sometimes we learn lessons out of a disaster, and the lesson should be learned that because of FMD, we can now stop sheep moving, but we could not stop half a million sheep moving when there was a financial advantage to those smugglers.

489.

We can sell those half a million sheep. At the moment, the price of lambs in Northern Ireland is less than that on the mainland. That is because we have half a million lambs on the market that are no longer going elsewhere. We can market those lambs and level our price up to that of GB. The lambs have not been there for two years - they have been smuggled because of VAT and unpaid levies.

490.

The Deputy Chairperson: I take your point. Mr Mathers said earlier that the LMC, the Department of Agriculture and Rural Development, LEDU and IDB need to come together and pool their ideas. That is long overdue, and needs to be done.

491.

Mr Armstrong: You said that classification by human eye is most effective. Few of us classifying animals would have any qualms as to how to do it. There is always that 20% lean to the producer. Do you think that the price structure was leaned towards that possible 20% error rate?

492.

Mr Mathers: I do not fully understand the question.

493.

Mr Armstrong: When that 20% is leaned to the producer, the pricing structure for the meat plant could have been lowered to allow for that error in judgement of the stock.

494.

Mr Duffy: I see what you are trying to insinuate. In terms of grading, I have said before that not enough is being paid at the upper end of the scale and too much is being paid at the lower end of the scale. Those farmers who actually engage in quality production in a serious fashion are not being appropriately rewarded. The brown envelope is in no way related to quality.

495.

Should the price paid by the meat plants reflect the fact that the grading is in favour of the farmers? The meat plants basically pay what they can afford to pay, depending on the customers. It is an average price. It ranges from £1·70 to as low as £1·30, but it is an average price every week. That is the way it works.

496.

The differential is not directly related to the quality of the animal. I said that last week. If we could have an objective classification system, based on yield, that would take into account the prime parts of the animal - obviously a fillet or a loin has a much higher value - then it would be a lot easier for everyone concerned.

497.

Mr Armstrong: What can we do to promote that idea?

498.

Mr Duffy: As Mr Paisley Jnr said earlier, the LMC needs to forge strategic links with one or two of the bodies that are advanced in the science of objective classification. That would be money well spent. If the industry got together and decided to bring these machines into Northern Ireland on a trial basis, that would be a positive step. When this comes in, there will be a lot of doubt. People will look at the machine and say, "This is not what I want. I want what I had last week." A trial run of a year or so in conjunction with a major institution from another country would be a major advantage for Northern Ireland.

499.

Mr Armstrong: Would these machines come in and take the place of some of the graders in the long term? Would there be any extra expense to the farmer?

500.

Mr Duffy: Yes, the graders would be replaced. In fact, there would be a saving.

501.

Mr Kane: Mr Duffy, is it not the case that you are a member of the board of the LMC? How seriously are we to take any opinions that you might express to this inquiry? Are you not prejudiced in favour of the LMC? Is that not the case? Come clean.

502.

Mr Duffy: It is not the case. That is the simple answer.

503.

Mr Kane: That is not an answer at all. Come clean with us. Tell us.

504.

Mr Duffy: I have answered your question. You asked whether I was prejudiced and I said that I was not.

505.

Mr Moore: The Committee should be aware that both Mr Tweedie and I are former members of the LMC board. The membership of that board is not written in stone; it rotates to represent the entire industry. The intimacy of that relationship is a strength, not a weakness.

506.

Mr Kane: A lot of fingers in a lot of pies, gentlemen.

507.

Mr Duffy: Did you ask Mr McCoy of the Northern Ireland Agricultural Producers' Association (NIAPA) the same question?

508.

Mr Kane: I did not get a chance to ask Mr McCoy that question.

509.

Mr Duffy: The answer to your question is simply "No".

510.

Mr Kane: Mr Mathers, you were once a grader. Is there a natural progression through the ranks from grader to the top of the tree among the processors?

511.

Mr Mathers: Come again?

512.

Mr Kane: Are you not among the processors?

513.

Mr Tweedie: I can answer that question -

514.

Mr Kane: With all due respect to you, I put the question to Mr Mathers.

515.

Mr Mathers: When I was a grader, I was not working for the processors. I was a civil servant.

516.

Mr Kane: Is that your answer?

517.

Mr Mathers: Yes.

518.

The Deputy Chairperson: In the opening paragraph of your submission, you say that you support the core funding of the LMC by the Government, but in the second paragraph you say that the LMC should remain independent of Government subsidy. Can you explain what you mean by these apparently contradictory statements?

519.

Mr Mathers: What we are saying there is that you seem to be under a misapprehension. In his letter to us, Dr Paisley said that the Government were funding the LMC, but that is not the case. There is an opportunity to introduce that, and it should be given serious consideration in the light of what is done in the regions that we are competing against.

520.

The Deputy Chairperson: You also say that those people who have the industrial and business experience essential to the successful operation of the Commission would not apply for such positions. Can you explain further what you mean by that?

521.

Mr Mathers: The thinking behind that is that currently, when there is a vacancy on the LMC board, anyone can apply. The people that we believe should be on the board are people who have experience of industry - captains of industry - who understand the international marketing arena. Those people do not apply for those sorts of positions. It is just not in their nature. They operate in a different realm. They do not apply, and the people who are likely to apply are people who do not have the skills that are required, unless someone takes a suitable candidate and twists his or her arm.

522.

The Deputy Chairperson: You also say that the Nolan principles contribute to mediocrity in appointments. Assuming that the Nolan principles will continue to be the guiding principles for appointments to the LMC, how can people of the calibre and experience that you feel are required be encouraged to apply? Who would you like to see on your board in order to make it more compatible with the present situation?

523.

Mr Mathers: Our point is that we do not want to end up with a board of mediocre people who are not au fait with the professional marketing requirements of today's industry. We are stuck with the Nolan principles as far as public appointments are concerned at the moment, but in our opinion those principles are prejudicial to the real top professional people that we need on the board of the LMC.

524.

The Deputy Chairperson: Elected representatives get questions fired at them left, right and centre. When the thing is going well we are never approached, but when we start to hit the wall, that is when the muck starts to fly, if I can put it that way. Quite a lot of meat is imported into Northern Ireland from the South. I often hear that it is being brought in for one purpose, and that is to keep prices down. Is that the case? Is that meat of the same quality as our own produce, or is it of a better quality?

525.

Mr Duffy: The retailers have allowed a greater percentage of Southern meat on their counters because of the foot-and-mouth crisis.

526.

Two weeks ago we were out of the slaughtering arena. In order to ensure continuity of business, we had no choice but to bring in meat from the south in carcass form. It is an integral part of the farming sector for the producer, as well, that he takes store cattle from the western seaboard up into Northern Ireland. That has traditionally been the case. Some of the good feeders are actually suffering from that at the moment.

527.

In my opinion, Southern meat does not have as good a conformation as the carcasses that are produced in Northern Ireland. From a quality perspective, it is in no way inferior in terms of what it has been fed, et cetera.

528.

When the meat is taken in, it is labelled accordingly in the plant and on the supermarket shelves. During this week and next week, the percentage of Southern meat will quickly be reduced in order to take account of the slaughtering numbers that are coming on board at the moment.

529.

The Deputy Chairperson: Something that is in the minds of many people is that all these imports that come in are labelled, "Packed and processed in Northern Ireland." When those boxes go out, the Department of Agriculture has to put a label on the bottom of the box. There is a responsibility there on the Department of Agriculture. We know what was happening with the stuff that was coming in from Germany that time. I am only going on the evidence that is given to me. The people who told me about this know what they are saying. It was going on to other factories in GB and being processed there as Northern Ireland beef. Have you any control over that?

530.

Mr Duffy: Why do you, or any member of the Committee, not come to a meat plant and see for yourself? You have told me before about the work schedule of the Committee and I understand that you may not have the time. It is a pity that you cannot see it at first hand. There are so many labels going on boxes at the moment. We are the most regulated industry that I know of.

531.

If meat comes from a plant in the Republic in carcass form, say EC 300, and comes into Newry, it will be labelled, "Slaughtered in EC 300. Processed in EC 9001." It then goes to a retail packing plant, where "Retail processed in plant number x." is added to the label. It must be done in batch form, so you have a batch number on the label as well. That is how the meat can be traced right back to the farm of origin.

532.

The Deputy Chairperson: Even if it is German beef?

533.

Mr Duffy: It is the exact same rule.

534.

The Deputy Chairperson: I was not saying that is was German bulls.

535.

Mr Duffy: Are you referring to a particular incident?

536.

The Deputy Chairperson: I am referring to an incident that happened. I am only asking for information.

537.

Mr Duffy: It is exactly the same. If it comes from Germany or from Italy, it will have the slaughter number appropriate to that plant.

538.

Mr Kane: Mr Mathers, you said that skilled personnel must be appointed to the board. Do you have skilled personnel on your board at this moment?

539.

Mr Mathers: I do not have a board.

540.

Mr Kane: Do you not?

541.

Mr Mathers: What board are you talking about?

542.

Mr Kane: Forget about that question. It is not going to be answered anyway.

543.

The Deputy Chairperson: There are a number of further questions that we would have liked to ask. If we send them on to you, will you respond to them?

544.

Mr Duffy: Include Mr Kane's last question. We will endeavour to answer that for him.

545.

The Deputy Chairperson: I remember when Mr Mathers was a grader. The set-up now is completely different. I do not mean any offence, but we have a job to do and we have advanced 30 years since then. We are in a different set-up altogether. Thank you very much.

MINUTES OF EVIDENCE

Friday 11 May 2001

Members present:

Rev Dr Ian Paisley (Chairperson)

Mr Savage (Deputy Chairperson)

Mr Bradley

Mr Douglas

Mr Kane

Mr Molloy

Mr Paisley Jnr

Witnesses:

Mr H Marquess )

Mr J Carson ) National Beef Association

Mr T O'Brien )

546.

The Chairperson: Gentlemen, you have been with us before and we welcome you back to this meeting. Perhaps you would like to make a statement, and we will then ask questions.

547.

Mr Marquess: I thank the Committee for allowing the National Beef Association (NBA) to take part in this debate on the Livestock and Meat Commission (LMC). Robert Foster, our chief executive, is unable to attend. He is meeting Nick Brown and Baroness Hayman this morning with an independent delegation on agriculture. It has put us out a bit because we would not be up to the same standard as him. Arthur McKevitt, our secretary, had an accident and is unable to attend. I apologise for them both. We will endeavour to put our case, but you must realise we are only farmers who have the welfare of our industry at heart. We feel humbled by this distinguished company surrounding us in this Committee for Agriculture and Rural Development.

548.

Farmers cannot be expected to pay any more levies than at present, in their financial circumstances. The total levy depends on the meat plants, but 80p goes to the Livestock and Meat Commission (LMC) on levy and £1 goes to the LMC for grading, out of a total cost of approximately £16. Realistically, farmers would not be against higher levies if value for money were increased. Substantial funding, if needed, would have to come from the Department of Agriculture and Rural Development, processors or EU funding, to boost the £2.46 million required to run the LMC. Processors financing the LMC could pose a problem, as farmers may be obliged to pay for this by a drop in the price of cattle. We are all in this together, but farmers cannot afford to take another loss at the present time.

549.

Northern Ireland is at a disadvantage to Great Britain in that costs are higher and returns are lower. The National Beef Association fears that if the meat plants put more money into the LMC funding, they will become more dictatorial. The LMC has a thankless job running the classification service. We believe that meat plants have an influence on graders. This is backed up by a report that classification is wrong in 20% of cases. In circumstances where farmers do not complain, this could possibly rise by another 10%. We never have complaints from farmers slaughtering cattle at small meat plants. There are no queries about grading, yet the same people are grading these animals to the same level as in the larger meat plants. Graders should be more responsible, putting their names to classification sheets and tickets on each animal.

550.

Returning to the suggested wrong grades - in the range of 20-40% - if this were evident in any other practice, such as the health service, pay-offs would be the order of the day. There are different views on classification. If meat plants carry it out themselves, and it is not done properly, they would not acquire the cattle, as competition would be higher. The problem would be a price-fixing arrangement, as already suspected.

551.

The LMC should hold more direct lines of correspondence with farmers - be transparent and listen to proposals. The LMC bulletin could cover the total grid of cattle at each meat plant, in this way playing the price structuring off one against the other. For example, if meat plant A, say, killed 60 U3s, 200 R3s, and 120 R4Ls, its price could be quoted, and it would be shown against other meat plants rather than just one quotation for all meat plants. Bonuses could also be shown. This could possibly force meat plants to put grades together in some circumstances, such as a U3 and a U4L, an R3 and R4L, and O3 and O+4L. Although this would mean a slight fall in profits for the processors, the meat eating quality could be taken into account.

552.

The LMC should dissuade processors from aitchbone hanging, which results in the carcass being distorted. It then cannot be graded on appeal. The LMC and the Department of Agriculture and Rural Development should work together to show the realistic price of production. They should shame the meat plants into paying more to producers by publishing the loss margin to farmers in the bulletin. Farmers should not have to sell cattle at a price less than the cost of production, as is the case now. The LMC and the Food Standards Agency should assist in ensuring that imported meat comes up to the same standard of production and welfare that the farm quality assurance scheme requires of its members. As has been shown recently, free trade means free disease.

553.

The LMC have to be complimented on the work that has been done through schools. The NBA would suggest funding be kept available for home-based production of red meat and lamb to combat the effects of BSE and foot-and-mouth disease, and also to combat the effects of a booklet by Dr Vernon Coleman, circulated to 6,000 schools, desecrating the meat industry and farmers.

554.

Promotion of live auction marts should be ongoing, as either wittingly or unwittingly the LMC and the Department of Agriculture and Rural Development have promoted the meat plants until they have acquired a stranglehold on farmers. Meat plants need competition to raise the price of cattle to farmers. The Department of Agriculture and Rural Development has almost sounded the death knell for markets. Competition is always very evident in how Christmas fat stock sales boost the cattle prices, thus showing how much farmers need the live markets.

555.

Promotion of exports in the short-term should not be a further cost to the farmer, but should be the responsibility of the processors. In the long-term, if prices rise producers may be more willing to contribute to export promotion. It would be beneficial if the LMC were to throw its weight behind the auction marts in their quest for compensation, as they are the only group that has been ordered to close by the Government.

556.

Appointments to the board of the LMC do not include any full-time farmers. We suggest the appointment of four full-time farmers - not 'yes-men', four representatives from the Northern Ireland Meat Exporters' Association (NIMEA) and one independent chairman. The board needs at least 50% full-time farmers with a complete change after either one or two years. At present the board members are paid roughly £4,000 to £5,400 a year. There should be no salary for this job, just expenses and mileage. In this way only really interested parties with the interests of the industry at heart would apply. The Minister, who makes the final appointments, should be made more aware of this situation.

557.

The NBA feels that its has been deliberately kept off both the red meat strategy group and, lately, the farm quality assurance standing committee. Although application has been made to both in the past, we do appreciate that the red meat strategy was instigated before the NBA was formed in Northern Ireland. It seems possible that the reason for NBA not being invited on to either of these groups indicates the cosy relationship existing among the present members.

558.

The Chairperson: Gentlemen, I have to leave the meeting for a few minutes and my Deputy Chairman, Mr Savage, will be taking over. I had just one question, which you have answered. It related to the membership of the present system and you have answered that very fully. This is important because if we do not have a proper representative body to run this organisation, we are not going to see fair play. We need to put farmers on the board, people who are not 'yes-men'. I have wide experience in political life, and if you put a chain on a man's neck and give him a salary, he becomes somebody else's man. In the case of a quango, where it is the grace and favour of the Minister, there is a lot of 'keeping in' with the Minister. These people should only be reappointed for one term, after which their services should be terminated. They should not have security of tenure, which is important.

559.

I will return to the meeting. Mr Savage will now take over.

560.

The Deputy Chairperson: I listened to Mr Marquess cover these relevant points, and it is fair to say that unless farmers receive a fair return for their produce, then they are on a hiding to nothing. Your concern about an additional levy is that it will ultimately be passed on to the producer, and you referred specifically to the possibility of this occurring through the overall reduction in the price of prime cattle. What steps can be taken to ensure that the levy paid by the processors is not passed on to the producer?

561.

Mr Carson: In Great Britain they are talking about us paying £35 - they pay roughly £70. It is not an argument in Great Britain because for some time they have been paid £70 more per animal than us. If we were getting value for money out of the LMC I would prefer to pay the £70 and not have the meat plants involved.

562.

Mr Marquess: We will be in difficulties for as long as cattle remain in surplus. There will be problems until meat processors have to go out and look for cattle. Farmers have been dragged into the situation where they go to the meat plants rather than the auction marts. The problem arises if there is a surplus of cattle, and that is the crux of the matter. Supply and demand will rule the price.

563.

Mr O'Brien: Meat plants have the monopoly, and are still using their wherewithal to find out what cattle are ready and what cattle are coming up to the 30-month limit - there is evidence of that. That area should be scrutinised.

564.

Mr Carson: I do not know whether or not it is a good idea if a newspaper headline were to say that the NBA has suggested to this Committee that farmers should be asked for £70 rather than £35 at this time. As you know, farmers are living in a state of gloom, doom and despair. The beef industry has not been in a profit-making situation for the past four to five years - no other industry has suffered as much. This has been going on for four or five years, but other agriculture sectors have had their good and bad years in between. Therefore it is not acceptable to ask the farmer for £70 at this stage, but that is how the NBA would prefer it.

565.

The Deputy Chairperson: Farmers do not mind paying the extra expense providing that they get a good return for the end product.

566.

Mr Carson: It is a similar situation to the MLAs. The public does not mind the salaries MLAs receive providing that they are doing the required work. I do not care if their salaries are doubled so long as their work comes through to the agriculture industry.

567.

The Deputy Chairperson: The processors are making a voluntary contribution to the promotion of meat products in Northern Ireland. Do you welcome that, and what other sources of income do you suggest in order to promote meat from Northern Ireland? Do you have any other ideas on how to promote Northern Ireland meat?

568.

Mr Marquess: The Department of Agriculture and Rural Development will have to provide money and, if possible, the EU. The LMC acquired European money for the promotion of the export of beef. At present meat needs to be promoted at home.

569.

The Deputy Chairperson: We have to encourage people to eat more meat - go back to their roast at the weekend.

570.

Mr Molloy: You had mentioned a book circulating around schools. Who promoted that, and how did it get around schools?

571.

Mr Marquess: I do not know. 'Farm Week' recently printed an excerpt from this book, which decimated the beef and farming industry. It called farmers "blackguards and slaughterers", and to be honest it was hate mail. I brought it up at an industry meeting and asked the Minister if she could get the LMC to combat it. She said the time was not right, but she would look at it in the future. I wanted to bring it to your attention. It was just hate mail, and if I wrote the same sort of material as Dr Vernon Coleman I would be in the High Court. I cannot understand why no one has taken him to task.

572.

The Deputy Chairperson: We have to encourage our young people in the schools to start eating meat, because our meat is the best quality in Europe. This sort of propaganda does not do the industry any good.

573.

Mr Kane: Do your complaints about classifications stem from perceived inconsistency in grading, the complexity of the classification grid or the generous level of mistakes that LMC are allowed to make? Also, what are your opinions, as a farmer's organisation, on the practice of aitchboning?

574.

Mr Marquess: This is when a side of beef is hung through the aitchbone instead of straight down by the ankle - the carcass is doubled over. This must be done when the beef is fresh, and it is the supermarkets and the processors who are trying to go down this line. Someone across the water carried out a survey for LMC, which said that this process enhances the tenderness of the beef. As a butcher for 30 years I totally disagree with that. It distorts the texture of the beef, and just allows fresh beef to go into the supermarkets sooner. A butcher would hang the hindquarter of a beast for three weeks. It does not help the industry by sending fresh beef into a supermarket.

575.

As soon as possible after grading the beast is taken and hung by the aitchbone on the hook. This distorts the whole carcass - it is hanging over instead of straight up. If you have an appeal on a grading problem, you cannot go back to that beast again to appeal it because the shape of it is distorted - they will tell you your appeal is over-ruled.

576.

Mr Kane: Is that what is behind the whole issue?

577.

Mr Marquess: That is correct. It is to get another catch on farmers, to put it in layman's terms. They can downgrade your beast and once it is aitchbone hung you have absolutely no way of getting that beast upgraded again.

578.

The Deputy Chairperson: Do farmers have any comeback?

579.

Mr Marquess: Farmers have no comeback - absolutely none.

580.

Mr Kane: What about the classification and consistency in the grading?

581.

Mr Marquess: The classification is good enough, but the people who carry it out are not coming up to the required standards. They would always have it in the back of their mind that a meat plant manager is looking over their shoulder, because managers would like a beast down graded so that they pay the farmers 6p less on the grade.

582.

When that happens, it should be brought to the attention of the LMC, and a senior representative should be sent out to check that beast. However, in many cases farmers do not follow their cattle through, and they often do not find out about a bad grade until they get their docket two days later. Farmers should be on site to see their cattle graded, but processors do not encourage that.

583.

Mr Kane: Why does your organisation seem more dissatisfied with the LMC than other mainstream farmers' groups who have given submissions to the inquiry?

584.

Mr Marquess: I do not think that we have damned the LMC. We are trying to encourage them to make some changes. The crux of the matter is that there should be four full time farmer members in the LMC. The LMC should also ensure that the meat plants cannot organise a fixed price. It is very obvious to me that prices have been fixed. I have been surprised by the attitude of the Minister, the permanent secretary, and everyone that we have contacted to look into the issue - there is a relationship there that does not want to be kicked. That is the plainest way that I can answer the question.

585.

Mr Carson: People seem to have got the wrong end of the stick - we are not against the LMC. Farmers should look upon the LMC as their organisation - their headquarters. Farmers should be encouraged to use rather than abuse the LMC. Every time farmers have a complaint, they should get on the phone and make an appointment to see them. The LMC are employed to serve the farmers as well as the rest of the meat industry. In some instances farmers are to blame for not contacting the LMC. They should be on the doorstep and on the phone, and they should look upon the LMC's headquarters as the headquarters of the beef and sheep industry as well. I would encourage farmers to use the LMC - it is a good organisation because the men in charge of it and the men who work in it come from a farming background and know a lot about farming. However, the LMC needs to be dictated to and pressurised by farmers.

586.

Mr Douglas: You said that the LMC should publish grades for each plant. Have you ever asked for that to be done, and do you think it is attainable?

587.

Mr Marquess: I do not see any reason why that should not be attainable because there are so few plants in Northern Ireland. It would be a different matter across the water where they have about 70 or 80 plants - in Northern Ireland we would only need to cover five plants. The LMC might be loath to take on the job, but they might do it if this Committee put them under pressure. It would be a good way of comparing plants.

588.

Mr Douglas: I thought there might be unfair competition because there are so few plants. However, I suppose you want to encourage competition. Perhaps we would then be able to clarify the situation and have a closer relationship regarding the grades.

589.

Mr O'Brien: A factory in my area, ABP Newry, actively discourages people from following their cattle around in order to see them graded. My son was in a factory last Thursday or Friday and was more or less told to go home by the people from the meat plant and the graders. Nobody wanted him around the place. This should be highlighted. The LMC is doing a good job but it is not very helpful in that sort of instance. On our farm we do not have a lot of beef animals so I would not be there very often. This was my son's only visit there in the past year and that was how he was treated. He was as much as told to get the hell out of the way.

590.

Mr Carson: Farmers are not good at marketing themselves. I am a farmer and at the market I hear farmers asking each other if they have got rid of their cattle or sheep. The priority is on getting the animals out of the way rather than marketing them. Farmers will have to start to market their product coming off the farm.

591.

The Deputy Chairperson: Mr Carson has made a valid point. The cattle produced in Northern Ireland can compete with anywhere else, but marketing is our weakness. We have to get to grips with that or the farmer will lose out.

592.

Mr Molloy: My question relates to the perceived relationship between the LMC and the processors, which is as it is because of the controversy over the classification and the low price. Will that be made worse because the marts are closed due to the foot-and-mouth outbreak? As a result of those closures, is there any likelihood that the processors will become the only outlet?

593.

Mr Marquess: About three weeks ago I spoke to a man who had put cattle into a meat plant. He phoned the meat plant for his grades because they did not want him to come into the plant. He tried to get an appeal done on his cattle. He was told that if he wanted an appeal, he could come and take his cattle away. He had six cattle put into the abattoir and he did not know what to do. He said that the meat plant would not take his cattle if he kicked up any more of a tirade. I told him that I would phone the meat plant and see what I could do - I was told the same.

594.

The live auction marts need to be actively engaged again. I understand that due to the present situation that cannot happen. When they do reopen they will have to be actively used, which they have not been. There used to be 4,000 or 5,000 cattle at the markets around the country. Nowadays you can count on two hands the remaining markets, and the cattle numbers have also decreased. That is not because the cattle are not there, it is because they are not being marketed properly. It all goes back to the same thing; there is an over supply and that leaves things open to manipulation.

595.

Mr Bradley: Over a couple of Committee sessions I tried to establish how many selling-on grades the meat plants have when selling off their product. I got longwinded answers, but I never got a satisfactory answer. What benefit would there be to reducing the number of grades, and who would benefit if they were reduced?

596.

Mr Marquess: It all goes back to supply and demand. If there is surplus cattle the grades can be manipulated. I would like to see a bonus for the top grades. We are trying to promote good quality cattle, so there needs to be a bonus for those grades. The problem is getting the meat plants to give that proposed bonus. If there was a realistic price structure on what it costs to produce an animal - and the LMC could do that - the meat plants not offering the production price could be named and shamed. I think that would be a big help.

597.

Mr Carson: It is with regard to the R3 and R4L grades that we are asking for a 6p differential. In some cases we are actually paying the same, if not more, for the R4L grade. That grade seems to be the problem one.

598.

Another problem is that many people believe that the NBA is against meat plants and NIMEA, - everyone except the farmer, which is far from the truth. We need everybody playing their part in the game. Problems occur when a farmer sells an animal for £500, and within two weeks the value of that animal has doubled. The farmer has kept that animal for two and a half years and within two and a half weeks its value doubles. The cake is not being divided up properly, and that is hard to accept. Farmers are taking swipes at the LMC and at meat plants. Everyone needs to sit at the table and sort this matter out once and for all. The cake is big enough, and farmers should get more than just the crumbs.

599.

Mr Bradley: I presented evidence to the Committee regarding prices. There were eight cattle sold in a factory in Scotland, and through the Assembly research department I discovered the price that those cattle would have made had they been sold on the same day in Northern Ireland. The result was an average of £65 less than in Scotland.

600.

Mr Marquess: Some members of our group took cattle across to Scotland at one stage because prices were so low here. It worked well for about three weeks, and then prices started to come down slightly in Scotland and began to rise here. I do not know if the situation was manipulated or whether it just happened. However, within three weeks the exercise had to stop because it was no longer cost effective.

601.

The Deputy Chairperson: You suggest that the LMC be divested of its classification responsibilities and the service offered for private tender. While the subjectivity of the classification process is indicative of transferring the problem somewhere else, why should the potential for bias in classification be any less with a private organisation as opposed to a non-Government public body? You have suggested that such an organisation would be paid for by the factories, so is it not likely that the relationship between the factory and the classifier would be perceived as being less independent than it is at present? For me as a farmer, what benefit would there be in a private body taking over the LMC responsibilities?

602.

Mr Marquess: The only problem is that the graders would get into the same position as the present LMC graders. They need to be held responsible for their actions. If someone worked in a café and slipped up on health regulations, then he would be held responsible. Our suggestion that graders' names be put on the carcass classification would make them more responsible.

603.

The Deputy Chairperson: Years ago at the beef sale in Portadown, I saw you, and people like you, coming in to buy your cattle for the Christmas market. Your eye was your judge, and you bought what you wanted - both you and the seller were satisfied. Is there no way that we can get back to that system again? About three months before the foot-and-mouth crisis, cattle were getting scarce and factories needed them for export orders. Their agents were coming round the farmyards - I know this for a fact, because they were in my farmyard. It was so much per kilo for the animals - no grade, no nothing. Is that is a fair system?

604.

Mr Marquess: If the processors are forced in to the situation where they have to buy cattle, they will go out and pay more. They will not do it unless they are forced in to that situation.

605.

The Deputy Chairperson: Are we back to a situation of supply and demand?

606.

Mr O'Brien: We need the auction marts back as soon as possible. We know it is not practical at the moment, but someone has suggested that they could be open in September or October. If we get rid of foot- and-mouth, marts should be allowed to open far sooner than that. People should be encouraged to go to the marts and this Committee, which is doing a good job, should encourage that. Factories can dictate their own terms and you have no say. You can go out with your cattle today, if you want to sell them, and the plant can tell you that the price will be 156 or 158 pence. If you could go to the mart, other people may buy them there. The factories are going to have to pay more money.

607.

The Deputy Chairperson: As far as I am concerned, it is a good opportunity to test the market.

608.

Mr O'Brien: If these markets are re-opened within the next week or two, how do people know what value their store cattle are? There is no guideline and dealers will go for the lowest price. Farmers want money now - they need money - and that is something that should be pointed out. The marts should be opened as soon as possible.

609.

Mr Carson: We need to encourage consumers to put their hand on their heart, before putting it in their pocket, and encourage them to buy produce from Northern Ireland. We need to get that across, and also do something about imports. I do not know what amount of beef is used in restaurants and such places, but it is said that there is a lot. They should be buying produce from Great Britain and Northern Ireland.

610.

The Deputy Chairperson: That is an area that certainly needs to be investigated.

611.

Mr O'Brien: Labelling has been talked about quite a bit. There is one particular place that I have been told about, where beef is packed. It is packaged in Northern Ireland, but it comes from Germany and elsewhere. That should be made clear - "Packaged in Northern Ireland" tells you nothing.

612.

The Deputy Chairperson: There should be more use made of our traceability.

613.

Mr O'Brien: Definitely so.

614.

The Deputy Chairperson: In order to balance the subjectivity of the classification procedure, there is an appeals procedure. This appeal is made to a senior classifier employed by the LMC. In your opinion, does this reflect a truly independent assessment?

615.

Mr Marquess: It is according to the senior member. I know quite a few cases where farmers have had their appeal upheld. I know of some occasions when it has not happened. If you put too much pressure on the meat plants, they do not need your cattle the following week. They leave you until your cattle are perhaps coming to 30 months of age. They have ways and means of manipulating you - to keep you waiting on the sidelines. They just do not need cattle this week. There are so few of them, all they have to do is lift the phone and say "Harry Marquess has ten cattle, do not take them this week. Hold them back a couple of weeks, and we will fix him". You are so glad to get rid of them at the end.

616.

The Deputy Chairperson: Whenever you are down to five, it is a serious situation. The final question that I want to ask is what would you like to see happening to make the LMC more streamlined for the farmer and yourselves. What changes would you like to see being made?

617.

Mr Marquess: This comes back to appointments. If full-time farmers were on the body of the LMC, they would have the opportunity to make changes, and they could force change if they were prepared to do so. They do not need to be "yes men". I can think of half a dozen men that could be put onto it tomorrow, and they would straighten things out.

618.

Mr Carson: At the same time everything that the LMC does is not wrong. If you get the name of rising early, you can lie all day. LMC does a lot of work, and has done so in the past. It did a good job on the promotion of beef to Europe before BSE. Perhaps it could have done more to try and sell beef in mainland Britain. We would criticise it for that, but on the whole, it needs to be used rather than abused - we cannot do without the organisation.

619.

The Deputy Chairperson: If farmers have complaints they have got to go to the LMC and make it aware of them.

620.

Mr Marquess: That is the reason that we put our submission forward to you - we hope that you can impress that on the LMC, because the farmer cannot impress upon it any more. We have done all that we can. In certain circumstances, the LMC members are not prepared to listen, but if a body such as yourselves approached them and said that you are breathing down the back of their necks, that would be an entirely different story. I am sure that if they saw Dr Paisley breathing down the back of their necks, they would sharpen themselves up a bit.

621.

The Chairperson: I do not know about that. When you are dealing with quangos, you always have the motivation of self-preservation. The LMC members know that they are not going to preserve themselves because they have friends on the Agriculture and Rural Development Committee. They are going to possess their position and keep it as long as they have the patronage of the Minister and the Department. I never in all my days met any quango with a degree of independence. Often you cannot even get elected Members of Parliament to be independent, and they must go to the electorate. I can pick a number of names out of a hat and, by patronage, put them into such a position - they will not bite the hand that fed them. The trouble is that they are biting the hand of those that do feed them - the farmers.

622.

There is one question that I would like to ask. Perhaps it has already been covered, but it disturbs me. It concerns the system of classification, whereby a man looks at an animal and he decides its well-being, its value and where it should be placed as far as money is concerned. Can that be altered?

623.

Mr Marquess: There is electronic classification, which is presently being worked on. It was subject to some discussion, and has been tried out in the Republic of Ireland. The classification was good but it did not come up to the right fat cover. It is in the advanced stages and perhaps in a short time it may come about. I still think a good man is equal to any machine providing that he is straight and does not respond to a meat plant manager looking over his shoulder.

624.

The Chairperson: The LMC has told us that graders are allowed a 20% error in everything that they grade. I asked them if they would employ someone permanently and allow them a 20% error - they said "certainly not". I could understand 5%, but they are working on a system of 20%. They then hide behind the European mask, saying it is European law. I would query whether it is European law. They do not have to abide by it - it is only a guideline from Europe and not a law. A 20% mistake is too much.

625.

Mr Marquess: It is too much.

626.

The Chairperson: Would you like your employees to regularly make so many mistakes?

627.

Mr Marquess: I would not.

628.

The Chairperson: It always favours everybody except the farmer. They tried to tell us that the farmers were quite happy about that.

629.

Mr O'Brien: They are admitting 20%, but what is the actual figure? It could be 40%.

630.

The Chairperson: I cannot get that information because there is no way to measure up every cow afterwards. In my opinion it is a system that cannot be monitored. How can you monitor that system, and at least get fair play? At the very most you should have a 5% error rate, but 20% - a fifth - is too much. That was the most revealing information to come out of their examination. The LMC try to say that the farmers like the system. They were trying to evangelise our poor heathen souls to believe that the farmers all agreed with it, while the farmers raise this matter everywhere my colleagues and I go. No one has ever come to us endorsing the system of classification.

631.

Mr Carson: You will have made farmers more unhappy, as I did not realise that they were allowed 20%.

632.

The Chairperson: Neither did we until we found out.

633.

Mr Carson: LMC say that they are taking their guidelines on grading from the Department. Would the Department be making the balls, and letting LMC throw them? Some graders want to keep on the right side, rather than lose their job. That is a matter that should be investigated.

634.

The Chairperson: They ran to Europe for cover. It is a guideline in Europe, not a law, and I am looking into the matter. A lot of European legislation is guidelines-[inaudible]

635.

When you take the price he has paid for that commodity, and the price of feeding stuffs, et cetera, it is amazing.

636.

We may want to send you some written questions in the near future. Thank you very much for attending.

MINUTES OF EVIDENCE

Friday 11 May 2001

Members present:

Rev Dr Ian Paisley (Chairperson)
Mr Savage (Deputy Chairperson)
Mr Bradley
Mr Douglas
Mr Kane
Mr Molloy

Witnesses:

Mr E Adamson )
Mr I Gibson ) National Sheep Association
Mr S Wharry )

637.

The Chairperson: I welcome you here today, gentleman. If you would like to give a summary of your evidence, the Committee will then have some questions.

638.

Mr Adamson: I am Edward Adamson, secretary of the National Sheep Association. Ian Gibson is the chairman and Samuel Wharry is the treasurer. The National Sheep Association does not lobby as much as the National Beef Association. We try to advise sheep farmers on technical matters. There are other people out there to do the lobbying for them. We never really get involved much in lobbying.

639.

Classification in the lamb trade is slightly different than for other animals. There are grumbles about it, but perhaps not quite as many as there might be - it is a different animal and is graded in a different way. The grumble is mostly that in the South standards are much less severe than here. A lamb in the South would be a grade higher than it would be here. I have witnessed this, and there is no argument about it.

640.

The Chairperson: What is the reason for that?

641.

Mr Adamson: I do not know. It should not be that way because the Livestock and Meat Commission (LMC) is an independent body here. In the South the graders are paid by the meat plants. Suspicious farmers might think that if a meat plant is paying a grader, the sheep would be given a low grade so that the meat plant would not have to pay as much for them. Perhaps they think that if a lamb is given a higher grade it can be sold more easily. There is definitely a difference.

642.

The Chairperson: We have found that such differences occur throughout the South. The bias is towards the farmer there.

643.

Mr Adamson: Yes, it is.

644.

The Chairperson: We have had evidence of that from all sections.

645.

Mr Adamson: My other main point is about farmer representation on the LMC board. If farm producers like ourselves are funding the LMC we ought to have a say in it. We would not want all the say, but I think we should have more say than we currently have. There are what I call "part-time farmers" on the board, but there are no full-time farmers depending on farming as their only income.

646.

The Chairperson: They refuted that. They said there was one or two.

647.

Mr Kane: They are only part-timers. I am sure they do other things.

648.

Mr Adamson: Yes, I am sure that they have to spend time on the other matters that they are involved in. Their income from those matters is probably more than that from their sheep enterprises.

649.

Mr Kane: They have a lot of fingers in the pie.

650.

The Chairperson: Are you ever consulted when they are appointing to the LMC board?

651.

Mr Adamson: No. We are not consulted. When there is a space to be filled on the board it is advertised in the press. None of our members saw the last advertisement; I do not know where it was advertised.

652.

Mr Gibson: The advertisements are usually in the 'Belfast Telegraph' on a Thursday. There would be a much higher chance of farmers applying for it if an advertisement was placed in 'Farming Life' or 'Farm Week'. Farmers are less likely to check the 'Belfast Telegraph' for advertisements.

653.

Mr Wharry: The first time that farmers are aware that there is going to be an appointment to the board is after the appointment has been made. It is a fait accompli before we even know about it.

654.

The Chairperson: It is probably the same with this Committee. Maybe we can get that rectified. The Department is totally opposed to appointing anyone who is a nominee from a body. It might write out and ask - which it does not do to you. It might ask the Ulster Farmers' Union; it might ask NIAPA. I do not know whether it told us that in evidence. The Department of Agriculture and Rural Development will do this on its own -it is a grace and favour matter. It is an appointment of the Minister, and we have no say on that.

655.

Mr Gibson: Our main problem is that it is funded with farmers' money, and yet farmers have no say in the running of it.

656.

The Chairperson: Fifty per cent of the commission should be full-time farmers, people whose main means of support is from farming. Then they would have an interest in protecting their own interests and those of the farming community.

657.

They argue that they are all great businessmen and that they are getting you a good deal. I have never met a farmer yet who thought he was getting a good deal from them. I was thinking of writing to them and asking them if they could bring me some of their constituents who voted for it. They paint such a rosy picture. They should take me out and show me where these people are.

658.

Mr Adamson: We are not totally against them. They are doing their best, but it could be better, and they could communicate better. They have a very bad communication system with farmers. If they had farmers on the board, it would help to improve their image.

659.

Mr Gibson: Things might not be better, but it might look better.

660.

Mr Adamson: You could bluff them better.

661.

Mr Gibson: Yes, it would look better if there were, say, two beef farmers and a sheep farmer on it. I would suggest someone from a company like Moy Park, which is a world leader now in Northern Ireland in meat production and meat exports. Someone like that should have an outside input.

662.

Moy Park itself was not going well. There was the directors' buy-out 10 or 12 years ago. Since then it has probably been the most successful agricultural company in Northern Ireland.

663.

Mr Savage: Not if you are talking to the broiler producers at the minute.

664.

Mr Adamson: The company itself has done well.

665.

The Chairperson: If you want to get down to what root people are thinking, you have to have representatives of the grass roots. They were not in that body. That was the first time that any commission brought everybody, and they were all well-heeled gentlemen. I do not think the bank manager has had a personal talk with any of them for a long time.

666.

Mr Adamson: Their salaries were in the published accounts. What the chief executive gets would pay quite a number of farmers.

667.

The Chairperson: They would settle for it?

668.

Mr Wharry: Most of us would settle for it quite happily.

669.

Mr Gibson: The brochure produced every year is another gripe. I am sure it costs a fortune to produce that number of copies. In the middle there is an appendix of 10 glossy pages. The Department of Agriculture and Rural Development sends me all that information. You can get it anywhere - and it is all in the Ulster Farmers' Union diary. There are a lot of other things in it, and a lot of blank pages. A lot less would do. To be honest, it is all padding.

670.

Mr Wharry: The complaint is that there is never enough money to fund promotional work, then that sort of money is spent on that. I know the argument would be that it is a small amount for promotion, but every little bit has to help.

671.

Mr Gibson: I do not think even a political party could produce a brochure like that.

672.

The Chairperson: Political parties are very poor beasts and always suffer from foot-and-mouth disease. You cannot get them to canvass or speak out.

673.

I can only say that the feedback on classification has been fairly serious and fairly critical of the personnel who run the commission. I do not think there has been anybody who has been against them altogether, and quite a few people said that they did some good things. However, no one came in here carrying a flag for them. They were not eulogised in any way. There was a series of criticisms which, for their own sakes, they need to face up to, but I did not see a great willingness among them to do that. They did defend classification here, but then they hid behind Europe. They certainly defended the composition of the board, and I think that composition was very good.

674.

Mr Kane: As far as I am concerned, the meat plants and the processors have them in the heart of their hands.

675.

Mr Wharry: There is a feeling among farmers that the LMC is controlled by meat plants. LMC makes no effort to counter that.

676.

Mr Savage: We note your suggestion that the broadening of levies away from the dead weight lambs to the number of ewes might be more fair across the lamb and sheep sector and would provide a broader basis for levy collection. Do you consider that such an extension would gain widespread support in the Northern Ireland sheep industry?

677.

Mr Adamson: It would from those who sell dead weight because they already pay it. However, those who sell their lambs live - if that ever happens again - do not have to pay. According to human nature, they will not like it. The lamb levy would amount to £38,000 or £40,000, but we cannot expect a lot to be done for the sheep industry on that sort of money. Money is needed from somewhere, but it is hard to find, and we cannot afford it.

678.

Mr Savage: Are things tight at the minute?

679.

Mr Adamson: Yes. We are in big trouble this summer. We have nowhere else to go but the meat plants. We are at their mercy, and it would appear that they are going to pick our bones.

680.

Mr Savage That is likely.

681.

We note your concern that a statutory levy on processors may be indirectly passed on to the producers. What steps do you think should be taken to ensure that the producer is protected from this?

682.

Mr Adamson: That is out of our hands. It would be a decision for people above us. When the processors have costs they automatically come back to the producer. There have been other costs in the past that we have had to pay, and this would just be another one.

683.

Mr Savage: The cost to the producers would not be so bad if they were getting a good price in the first place. They could put up with that.

684.

Mr Adamson: At the minute the percentage that is taken out of the lamb price is larger. If it were a smaller percentage we could cope with it.

685.

Mr Wharry: That is why we feel that it would be better for the processors to be involved in promotional work along with LMC. Let them go for joint promotion or something like that, rather than charging on the basis of cost per lamb. If it is done on a cost per lamb basis, it will be passed directly back to the producers. There is no doubt about that. If they are spending money on promotion and joint ventures with the LMC, there is a chance that it will come out of a different budget.

686.

The Chairperson: Following that point, you suggest that a levy should be collected on all ewes, rather than lambs at slaughter. The funds collected using your figures would only just top £100,000 at current levy rates. Is it possible to run any real promotional campaign with that amount of money?

687.

Mr Adamson: No, not really. However, it is more than they were using, and it would have to be done in conjunction with the levies lifted on beef. We have to work in co-operation with beef producers.

688.

Mr Bradley: I will comment on the appointments. Although we would all like to see four or five full-time farmers on the board - whether they produce sheep or beef - it might be impossible to achieve that. However, the LMC might have difficulty in keeping us from getting one or two farmers onto the board. We should keep that in mind for the future.

689.

In your submission you raised issues about the branding of Northern Ireland lamb products. Can you describe the main issues and problems that you perceive with the branding in the Northern Ireland lamb sector?

690.

Mr Adamson: Before the BSE crisis there was a Greenfields brand for beef, which was quite successful in Holland. One of the Dutch supermarkets, Albert Heijn, was buying Greenfields beef. If something similar could be developed to promote Ulster lamb, perhaps under the Greenfields label, those producers who use that stamp would then have to pay something for the privilege. Would that bring in money? However, there is a chicken-and-egg situation. You would have to prove that Ulster lamb was something special. There is a long-term problem there, but it worked for beef, and it could work for lamb. Would it not be possible for the producers or the promotional body to get some money to raise capital to promote it better? We hear about Scots lamb and Welsh lamb. Those brands seem to be doing well, but we do not have an Ulster lamb brand.

691.

Mr Savage: We have got to promote our lamb.

692.

Mr Adamson: Yes. It is not being done at the minute. The bulk of our lamb goes into the supermarkets' own-brand packaging.

693.

Mr Wharry: A lot of supermarkets would be interested in having a branded product. The Ulster lamb groups who attended the SIAL food fair in Paris said that they got very positive feedback from the French supermarkets. They were keen to source lamb from here, which would be branded as Ulster lamb.

694.

The Chairperson: I can confirm that. I went with the other MEPs to certain stores where French people were asking for Ulster meat. We were amazed when we stood at the counters, and they said that we should be labelling all our goods because we have a good name.

695.

Mr Adamson: We have a good image and a good name which we need to try to build on and keep to the fore. The only way that can be done is with branded products.

696.

The Chairperson: Would it not follow that the LMC should have endeavoured to achieve that long ago? Mr John Taylor was still a member of the European Parliament, and that is some time ago now. John Hume and I were amazed by what was said to us when we entered the store and the French women came up and asked for Ulster meat. That was not arranged. Ulster meat is very popular there.

697.

Mr Adamson: We do not need to be humble about our products.

698.

The Chairperson: The people said that Ulster meat tastes good.

699.

Mr Adamson: Our product, both beef and lamb, is grass-fed, whereas French lamb is intensive house-fed, which is a totally different thing.

700.

Mr Wharry: If you query the LMC on that programme it would tell you that it cannot afford the programme and has not got enough money.

701.

The Chairperson: There has been a lot of money over the years. We are not asking the LMC to do it in three months. One would have thought that it would be concentrating where there is a need. We sold over £1 million worth of meat to Holland, and we lost that, although we are getting a bit of that market back. Having lost a market, it is hard to get that trade back again.

702.

Mr Adamson: None of our present problems are helping the matter.

703.

Mr Molloy: In the submission you state that we need better information with regard to grades. What are the specific problems that you have encountered in terms of the LMC's grading groups? What improvements would you recommend?

704.

Mr Adamson: The problem would be one of reporting. We receive feedback that there is a percentage of Es, Us and RS and that there is 80% of 2s, 3s and 4s. When one slides those two together they do not match. It is not a case of E2s, E3s and E4s. The individual grades are E1, E2, E3 and E4. The grading would need to be split up more to make it more useful. It does not mean a lot at present. It is rounded up into big lumps. If it were to be split up we could then see where they matched each other, where the conformation grade and the fat levels were together. Sorry if I have not explained that too well.

705.

Mr Wharry: If lambs are going to be tagged with individual numbers - [inaudible due to mobile phone]

706.

Mr Adamson: It looks like individual tagging is going to be forced upon us, so we might as well make use of it.

707.

The Chairperson: It is a very costly business.

708.

Mr Wharry: If we have to do it we might as well get some benefit out of it.

709.

The Chairperson: Is the farmer going to have to pay for that? The Department of Agriculture and Rural Development will not pay for it.

710.

Mr Adamson: We cannot afford to pay for it.

711.

Mr Wharry: It will lead to a contraction in the sheep flock - a lot of sheep farmers are going to say that it is not worth the hassle and get out of the business. That is happening already and this is just going to accelerate that process.

712.

The Chairperson: What benefit is that to you if you do not hear the result?

713.

Mr Wharry: That is what we say. If we have to do it, we have to get some benefit from it.

714.

The Chairperson: The results will have to be some fresh financial help to farmers. What if the Department of Agriculture and Rural Development proceeds to tag three million sheep?

715.

Mr Wharry: The current APHIS system is nearly at its limit, and that is a problem. How will the Department cope with that if three million sheep hit it?

716.

The Chairperson: The Department of Agriculture and Rural Development wants to be the giant that holds us by the throat. That Department takes great exception to anybody putting legitimate arguments against it - everyone there is defensive. You touch them, and they immediately get back at you, even if you have made no charge against them. That Department is now going to establish a dictatorship over three million sheep. This is not the time to invest in the tagging of three million sheep.

717.

Mr Adamson: That is right, and it will make a lot of sheep farmers break the law.

718.

The Chairperson: When everything has been taken into consideration, it must cost approximately £1 to tag one sheep.

719.

Mr Adamson: To tag correctly, you have to double tag. The cost of that, plus our paperwork, means that the cost would not be far short of that sum.

720.

The Chairperson: That is £3 million out of our industry.

721.

Mr Adamson: We are on £22 per week.

722.

Mr Wharry: It will cause a lot of stress, especially for smaller sheep farmers, and probably older sheep farmers. They may say that it is not worth it.

723.

The Chairperson: The overall policy of the Department of Agriculture and Rural Development is to put smaller people out of business, and if there is a way that it can do that, it will. I am worried about that, but the cost might prohibit the Department.

724.

Mr Douglas: It was highlighted that there are two people on the LMC who are involved full-time in meat plants. There should be at least two from the farming community, with one from the sheep sector. That was highlighted, and it is important that we bear that in mind.

725.

You mentioned that prices are slightly higher in the South and are graded to the benefit of the farmers. At the same time, it appears that a percentage of our lambs are slaughtered in the South. Whether that is legal or illegal is another matter. That fact is well known, and I know that a lot of lambs go to the South from my end of the country - I am talking about lorry loads that have gone. That points to the fact that the LMC's meat plants promotion is not doing its job properly. At the same time, we have to ask where we would be if we did not get rid of all those lambs.

726.

Mr Wharry: We will find out in the summer.

727.

Mr Douglas: A man in my area exports a lot of sheep to the South. People say that he does not give the best prices, but that he clears a lot of sheep - the market would be distorted if those sheep were not going.

728.

Mr Adamson: Again that is not the answer - it is another question. Those lambs go to the South and the Southern plants are probably putting them into the same markets as the Northern plants.

729.

Mr Douglas: They are then being sold on as lamb from the Republic, rather than from Ulster. That means that the promotion cannot be right.

730.

Mr Adamson: That appears to be the case. Lamb production in the South is currently not near capacity. Northern meat plants are starting to have trouble coping with lamb numbers - we are only into spring, and there are few lambs there. Later in the season we will have full production, but that does not bear thinking about.

731.

Mr Douglas: Are you saying that the lambs will go to the South?

732.

Mr Adamson: I do not know where they will go, unless the plants here makes a better effort to get them into GB. The problem is that there are too many lambs [Inaudible due to mobile phone]

733.

The press last week said that the chief executive of the NSA in England spoke to Meat New Zealand, and it has agreed not to target GB in its promotion to sell New Zealand lamb. That promotion will shift to Europe. However, I think that if a supermarket were to ask for New Zealand lamb, Meat New Zealand would probably supply it.

734.

The Chairperson: Meat New Zealand can supply the lamb because it has succeeded in getting the name "New Zealand" into the housewife's mind. If you have the market, you do not need to target it. New Zealand has that market. It became an issue when we joined the EC. Roast lamb is a very big political hot potato. It was a big issue in New Zealand, and the company had to negotiate a special arrangement with the EC so that we could eat New Zealand lamb. New Zealand lamb was asked for - the housewife demanded it. That lamb was also at a good price. I ate New Zealand lamb as a boy.

735.

Mr Adamson: We cannot compete pricewise with New Zealand lamb. However, you might notice a quality difference between the two.

736.

The Chairperson: There is a definite difference between New Zealand lamb and the lamb that is brought up here. I do not know if any of you have been to New Zealand, but it is a different terrain.

737.

Mr Bradley: Are they subsidised in New Zealand?

738.

Mr Adamson: No. The point is that the operation is large. You could be talking about one man looking after 10,000 ewes.

739.

Mr Wharry: It takes 8,000 to 10,000 ewes to justify one man's wages.

740.

Mr Bradley: The point is the sheer numbers.

741.

The Chairperson: There is a special arrangement for getting them in. There is no tariff.

742.

Mr Adamson: That was an arrangement that was made.

743.

Mr Wharry: Although Meat New Zealand is not subsidised, the New Zealand Government spend a great deal on promotion. The Government pay for all the promotion of New Zealand lamb.

744.

Mr Bradley: There is a quality scheme in place there.

745.

The Chairperson: Australia is the clearing place for New Zealand lamb outside that country. That ensures that it gets to Britain. That is why I said that they have already established a good system.

746.

Mr Adamson: We have welfare codes in place, and there are standards which we have to keep to. If one man looks after 10,000 ewes, then I am afraid that there are no codes.

747.

Mr Wharry: They use easy-care systems where during lambing time you leave them for three weeks.

748.

The Chairperson: Did New Zealand ever have foot-and-mouth disease?

749.

Mr Wharry: No. The import controls in New Zealand are stringent, and there are even controls on people coming into the country.

750.

Mr Adamson: Sheep that are imported into New Zealand go onto an island for quarantine. The sheep that are eventually allowed into New Zealand are about three or four generations from that importation. Stock will not be directly imported into New Zealand - farmers only breed from what is there.

751.

Mr Bradley: Is there no tagging in New Zealand?

752.

Mr Adamson: No. I do not think so.

753.

Mr Kane: Does the complex nature of the current classification grid lead to greater difficulty when making a determination?

754.

Mr Adamson: It probably does. We commented that we could cut those classifications down. I mentioned that we were going to talk about four grades of lamb - a super lamb, premium lamb, the base lamb and penalty. We have the five European grades, and the five fat levels. If you multiply five by five you have 25 grades. Lambs are not sold like that. The EUROP system is only a guide to the meat yield. An E lamb will produce more meat than a P lamb.

755.

Mr Gibson: The EUROP system was devised to standardise grading in Europe. We mentioned the size in the North; the system was meant to make an R3 the same shape of beast in France, Ireland, and England. There was to be a uniform classification system in Europe. It does not seem to be working.

756.

Mr Adamson: They do not sell that number of grades.

757.

Mr Wharry: It does not make sense because when a housewife goes to the supermarket to buy a lamb chop she does not ask whether it is an O3, an R3 or a U4L. The taste and the eating quality are more important. The grading system is more complicated than it needs to be. It should only be there as a guide to producers to see how their own stock is producing.

758.

Mr Kane: Mr Chairman, all the points made by the National Sheep Association and the National Beef Association need to be taken into consideration, and the Committee must hammer them home to the Department.

759.

The Chairperson: The classification system falls down because nobody benefits. The housewife does not say "I want a classification of that type of beef"; consumers do not know what they are buying. I would be in total ignorance if those grades were quoted to me. You said that valuable information is withheld from farmers, and they do not get the feedback that they should.

760.

There are two questions that we must get an answer to. We note that you would welcome information on objective classification methods. What level of support should there be for a development of objective classification in the Northern Ireland sheep industry?

761.

Mr Adamson: There would be plenty of support for it, but do you mean financial support?

762.

The Chairperson: Would you say that people would be prepared to say, "Yes we should have this"?

763.

Mr Adamson: How will the cost issue level out?

764.

Mr Wharry: Would there not be a case for funds that are being modulated from sheep annual premium to go to rural development?

765.

The Chairperson: Modulation funds?

766.

Mr Wharry: Funds from the rural development budget could be used for that and for promotional work.

767.

Mr Savage: You will see something along those lines.

768.

Mr Wharry: That money is going out of the sheep industry, and we feel strongly that it should be spent on something that will benefit the sheep industry.

769.

The Chairperson: The Minister promised us that at Westminster. Money that was taken from the farmer's pocket would be given back. Modulation was the great argument that was put. The Committee argued that you are taking money out of the farmer's pocket and saying that is a good thing. What benefit will the farmer have?

770.

Mr Adamson: Our worry is that the money goes back to the pockets of rural dwellers but not necessarily the farmers' pockets.

771.

The Chairperson: That worries the Committee too. There is the rural development craze; nobody ever defines what rural development or rural proofing is. The Committee cannot get definitions, and if it does not know what the terms mean it cannot help. What issues do you envisage a specialist sheep subcommittee dealing with specifically? Would local industry be prepared to support the work of such a committee?

772.

Mr Adamson: That committee would deal with subjects that we mentioned earlier that are specific to sheep. The industry would initially support the committee to see how it was getting on; if it does not do the job the industry will soon pull the plug. The committee would have to produce the goods. It sounds good, but unless the committee is of use the industry would soon lose interest in it.

773.

Mr Savage: The farmer must be given a decent return for what he has produced. We have not been getting that for the past three or four years. We must get the price stabilised. We are doing our best to promote the product, but it has to be promoted from both angles. This gentleman said today that he is trying for good quality lambs, but while there is no grading, it is very difficult to do that. There has to be a two-way effort here. The LMC and the Department must co-operate with the farmer and the producer.

774.

The Chairperson: What you are really saying is that the place and priority of sheep goes to the wall because the commission is more interested in meat than it is in lamb. While it concentrates on that, the sheep just come in on the tail of the cattle.

775.

Mr Adamson: When BSE first hit, we understood that there was a priority towards beef. We have got used to that now, but it should not forget about us. The beef industry is a bigger industry. However, the sheep industry cannot be neglected; there is no option in the hills other than sheep.

776.

The Chairperson: I agree with you. I believe that it is all-important because there are people who will buy Ulster lamb. I told farmers years ago that they needed to watch the young people. They are very peculiar in their eating habits now. A terrible lot of young people do not eat meat now. There are young people who will not eat beef, because of BSE, and have not gone back to beef, but they eat lamb. If the commission is concentrating on meat, then the lamb goes to the side. That suggestion is a good suggestion, but there is nobody on the LMC board at present that is able to advise about sheep.

777.

Mr Adamson: I suppose Ian Mark is involved with sheep, but the problem is that he has a foot in each camp. I know which one is the heavier.

778.

Mr Douglas: Do you have representation throughout Northern Ireland? I know that you represent all Irish producers. There are eight regions, and you are just one, here in Northern Ireland. Do you have a fair representation?

779.

Mr Adamson: We have representation throughout the Six Counties, but if I am honest, the sheep industry is focused more in Counties Antrim and Down. The membership runs parallel with sheep numbers.

780.

Mr Douglas: What sort of membership do you have?

781.

Mr Adamson: About 350.

782.

Mr Douglas: That is a lot of members.

783.

Mr Wharry: Whilst there are a lot of farmers who keep sheep who are not members of the National Sheep Association, for most of that 350, sheep would be an important part of their farming.

784.

The Chairperson: Gentlemen, thank you very much. We will probably write to you and ask more questions. We will also send you a copy of these proceedings so that you can make any corrections.

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