The Northern Ireland Assembly - Minutes of Evidence: Inquiry into the Livestock and Meat Commission

1.1 In conducting this Inquiry, the Committee wished to consider the results of the Department’s five-year review of the Livestock and Meat Commission (LMC) but found that the report, although completed in early 2000, had not yet been published. There were widespread concerns about this delay among those who took part in the Inquiry. Given the interest in the LMC’s performance, the Committee firmly believes that future DARD quinquennial reviews should be thorough, timely and the results disseminated quickly to all stakeholders.

2.1 Both the Committee and representatives of producers believe that the relationship between the LMC and the Northern Ireland Meat Exporters Association (NIMEA) is perceived as being too close, compromising the independence of the LMC in the eyes of producers. The LMC must, therefore, take steps in order to balance this negative perception. This could be achieved through greater transparency regarding the relationship. This perception is related to an underlying theme of the evidence presented to the Committee i.e. that of poor communication between the LMC and producers. This has contributed to suspicion and scepticism on behalf of the producer in relation to a range of LMC activities and must be addressed. The Committee recommends a range of actions that it believes will lead to improvements in both these areas.

3.1 Funding was an important aspect of the evidence presented to the Committee by every organisation. While there is widespread acknowledgement that the LMC is under-funded there is disagreement on how this should be addressed. Producers, and the Committee, do not support the argument for additional funding from slaughter levy, especially given the current crisis in farming. For example, establishing levy-funding parity with producers in GB would entail a significant increase for farmers in Northern Ireland. The Committee could only support such a move if producers here were receiving similar prices to their colleagues in Great Britain – this is certainly not the case. However, the Committee considers that annual increases in slaughter levy, in line with inflation, would be fair and reasonable.

3.2 The processor levy has been widely welcomed but there is still concern, shared by the Committee (despite explanations from NIMEA on the procedure for payment) that it may be passed back to the producer. The Committee is disappointed by the Department’s response to this concern and has made recommendations regarding DARD’s role. Other options for levy collection were also considered during the Inquiry. These include a levy on animals sold at livestock markets or from producers who do not take animals to slaughter. It is generally felt by the Committee that all who benefit from LMC operations should contribute, and although the Committee is reluctant to support any immediate increase in costs to farmers, it believes the LMC should pursue an extension of levy in the longer term.

3.3 The Committee acknowledges previous funding from the Department for specific marketing schemes. However, it encourages the Department to reassess the potential for ‘mainstreamed’ marketing support funding, particularly in light of the funding provided to competitors such as An Bord Bia in the Republic of Ireland, Welsh Beef and Lamb Promotions Ltd. and Quality Meat Scotland. The Committee also believes that Commissionmembers’ expenses should be covered by DARD in line with practice in the Meat and Livestock Commission in Great Britain.

would allow the LMC to fulfil its statutory and other obligations and allow it to engage in strategic planning with full confidence.

4.1 Perhaps the most contentious issue is that of classification or grading of animals. This is unsurprising given that the grade applied to an animal will determine the price paid to the farmer for it. Classification is mandatory and the LMC provides this service at the request of producers and processors. However, because of the subjective nature of the procedure, and the perceived close relationship with NIMEA, the LMC’s independence has been called into question. The Committee sees no obvious alternative that has widespread support and, in lieu of this, believes that the LMC should take steps to ensure a clearer distinction between its classification service and other elements of its operation. The Committee believes this may help re-establish producer confidence in the LMC and understanding of the classification system.

4.2 While the last EU appraisal of LMC classification was positive, these appraisals are infrequent. The Committee suggests that the Department provide enhanced supervision of the application of standards in the period between EU appraisals. Additionally, the Committee is of the opinion that the accepted standard error in classification of 20% is too high and that actual performance, as regularly assessed, should be an error rate between 5 and 10%.

4.3 The Committee heard evidence that the farmer is dissuaded from viewing the grading of his animals. As one way to gain farmer confidence, the Committee suggests that the option to view grading be available to all farmers. This would also provide the farmer and grader an opportunity to discuss how certain grades were determined.

4.4 The Committee heard evidence from NIMEA that the large majority of complaints come from the infrequent slaughterer and from the LMC that ‘big producers’ understood the grading system. This suggests that there is an existing prejudice that may be not be conducive to objective treatment of all producers, regardless of their size or frequency of slaughter. Rather than apportion blame to small mixed farmers for the number of complaints in classification, the Committee suggests that the LMC should take a lead in educating the producers and provide information on the procedure in order to foster good relations and better understanding of each other’s viewpoint. The Committee also seeks DARD’s involvement in investigating allegations that meat plant management has altered the grade of beef after classification. A full investigation is necessary to protect the integrity of Northern Ireland beef.

5.1 As in any operation where there is a decision-making process, the Committee believes there should be an effective appeals process for disputed grades. However it recognises that there is currently no body to whom an independent appeals process could be entrusted. The Committee therefore supports the NIMEA suggestion that the procedure should initially involve the original grader and then a senior grader only if disagreement persists. It further suggests an improved analysis of appeals by the LMC, with a view to targeting advice, education and support to those most in need. The Committee also suggests secondary or spot-check grading to counteract the loss of opportunity to appeal caused by the practice of ‘aitch-bone hanging’.

5.2 There was unanimous agreement that mechanical grading, if verified as technically feasible and acceptable to EU regulations, should be adopted in order to remove the subjective element of grading. The Committee supports calls for trials in Northern Ireland meat plants. The Committee also believes that the European authorities must be challenged to review their current requirements, which link grading to price reporting, and to consider alternative systems, such as are in use in Australia. Additionally, within the current system, the Committee believes that the number of payment bands should be reduced and biased towards providing strong incentives for higher quality carcasees.

6.1 Another function of the LMC is in the promotion of Northern Ireland red meat. However, evidence suggests that producers (and their representative organisations) are ill informed about these activities, and of positive independent evaluations of them. The potential benefits to primary producers of promotion also appear to be little understood. This is unsurprising, given that there is no immediate, tangible or direct benefit to farmers. The Committee suggests this lack of understanding is at least partly due to poor communication, which has fostered a negative opinion, among producers, of promotional activities. In this context, NIMEA’s praise of the LMC’s activities in this area will merely re-enforce perceptions of a ‘cosy’ relationship, rather than being seen in a positive light. The Committee therefore re-emphasises the need for the LMC to enhance its communication strategy in order to establish a better understanding of its broad remit within the wider farming community.

6.2 On a positive note the Committee is broadly supportive of the LMC’s promotional campaigns in NI, GB (including expenditure of £450,000 to secure use of the ‘British Meat’ brand) and internationally. It does believe, however, that there is room for greater emphasis on the home market, particularly in the promotion of lamb and beef for use in catering and domestic outlets.

6.3 There is also recognition from producer organisations that the LMC has played a role in securing business in the multiple retail sector and a reluctant acceptance that this is the main market outlet for NI produce. Understandably, producers question the continued expenditure on export marketing at a time when export markets are closed to NI beef. However the Committee believes it is necessary to maintain a market presence in anticipation of re-opened markets and that the LMC should, for example, continue its investment in the ‘Greenfields’ brand. Although there is disagreement on the involvement of retailers, in an advisory capacity, in the LMC’s marketing activities, the Committee believes that such expertise, where available, should be accessed to enhance promotion operations.

7.1Producers believe their sector is under-represented on the Board of the LMC and therefore welcome the proposed increase in Board membership to nine, which they expect to result in an additional representative from the farming sector. The Committee agrees that this is desirable. In relation to participation on the Board, there is concern about a potential conflict of interest since the NIMEA Chairman is also on the LMC Board. This again raises questions about the independence of the LMC in the eyes of producers. To minimise the potential for concern, the Committee suggests that the LMC reviews the implications of having current meat-plant directors on its Board and that a code of conduct for members should be drawn up and widely circulated. This would prescribe the behaviour expected of Commission members in terms of contact and relationship with their own sector.

7.2 Related to this is the issue of appointment to the Board. The continuation of appointment in accordance with the Nolan Principles is strongly supported by the Committee. Nominations can therefore be made by anyone and allows anyone to be nominated. This appears to the Committee to be the most open and fair approach, provided that the procedures for alerting potential candidates to board vacancies is improved. In order to enhance the quality and function of the Board the Committee suggests that a ‘balance of competencies’ be drawn up between the LMC and the Department, in consultation with the industry. This would help ensure a balance between sectoral representation in the event of resignation or completion of appointment. Furthermore, no unnecessary obstacles, such as formal qualifications, should be allowed to exclude any sector from consideration for appointment.

7.3 The Committee does have concerns, however, about second re-appointments to the LMC. Although it acknowledges the potential advantages of continuity, the Committee suggests that such appointments should only be made in exceptional circumstances. Finally, in relation to Board membership, the Committee suggests a review of payments made to board members, and that payments should be linked to attendance at meetings and involvement in ‘external’ LMC activities. In whatever way members are remunerated, the Committee believes that they must be dedicated to their task and that attendance at meetings should be an expectation of appointees.

8.1 The evidence points to a need for the LMC to ‘re-invent’ itself in terms of farmers’ perceptions and to demonstrate, unequivocally, its impartiality and independence. Importantly, the LMC’s ‘sponsoring’ Department, DARD, must also enhance its role in monitoring the LMC’s activities, particularly in the supervision of classification standards and in expediting its five-year reviews.

8.2 The Committee considers that changes to the current system of funding the LMC are essential, that they should be made in the near future and that they should be radical. Given that some increase in costs to primary producers is inevitable in the longer-term, the Committee also concludes that the changes must be sensitively managed, with full consultation with, and explanation to, producers.

8.3 The provision of a classification service is, the Committee concludes, the LMC’s biggest problem. When both processors and producers express concerns about the LMC’s involvement in classification (albeit for very different reasons) the importance of the problem should not be underestimated. The Committee believes that the only way of addressing the difficulty is for a far greater degree of separation to be brought in between the classification service and the LMC’s other activities.

8.4Furthermore, the Committee’s belief that a 20% margin for error in classifiers’ performance is much too great, and higher than in virtually any other job or profession, will be mirrored by many producers. The Committee concludes that the classifiers’ performance must be demonstrably better than this, in order to build producer (and indeed processor) confidence in the grading and payments system.

8.5 It appears to the Committee that the primary producer is under-valued by the rest of the supply-chain, despite the extent of his role in bringing an animal from birth to slaughter. This, the Committee believes, must be addressed in the context of carcase classification as much as in other areas. Improvements are therefore necessary in terms of farmers’ access to grading standards information, to meat plants themselves and to a credible appeals system within the grading process.

8.6 The Committee’s main conclusions from investigating the LMC’s promotional activities must be that there is insufficient understanding of the rationale for the activities and of the activities themselves, and that the LMC must address this lack of understanding. The Committee’s view is that funds spent by the LMC are justifiable in each of the three geographical areas: local, GB and international. The Committee do, however, conclude that more visible work in the home market would have a beneficial effect on producers’ perceptions of the LMC’s promotional activities.

8.7 As another area of contention, the Committee agrees that there is room for improvement in the way in which appointments are made, in the ways that board members relate to their own sectors and in the make-up of the board itself. As a major contributor to the LMC’s funding, the producer sector is absolutely justified in seeking to ensure that its interests are fully understood, acknowledged and taken into account as the LMC agrees its strategy and priorities. The Committee also agrees that a wide range of skills and expertise is essential for a strong board, and that it should not therefore be exclusively farmer-orientated. However, the Committee feels that a stronger and bigger producer representation is necessary to improve the LMC’s credibility amongst producers.

8.8 The Committee considered producers’ concerns related to the appointment of serving plant management to the board, and the alleged ability to exert undue influence on the Board’s policy in favour of the processing sector. The Committee concluded that the relationship of all members with their ‘own’ sector should be as transparent as possible and be subject to monitoring and control. It also concluded that if the LMC’s working relationship with processors was fully documented and understood, there would be less producer concern over this relationship.

9.1 The complete set of findings, conclusions and recommendations of this Inquiry may be found in Paragraphs 9-33 of the main Report and the Committee expects the LMC, DARD and others to study these carefully before making any response.

9.2 The Committee firmly believes that implementation of these recommendations - aimed as they are at the whole industry - would bring an improvement to the LMC’s operation and a greater acceptance of the organisation by a larger number of producers.

9.3 The Committee expects the LMC, in particular, to respond positively to these recommendations and, with the help of DARD and others, to bring about change beneficial to the entire red-meat industry in Northern Ireland.

9.4 The Committee would welcome reaction to this Report from any source. If you wish to comment on it please write to the Clerk of the Committee, Mr Paul Moore, in Room 401/D Parliament Buildings, Belfast BT4 3XX or e-mail him at:

1. The Committee recommends that DARD’s next quinquennial review takes place in 2004 and is completed within three months. The Committee further recommends that industry and other responses to any draft or preliminary report on the review are both acknowledged and given a substantive reply by the Department and that the final report is circulated widely. This circulation could be enhanced through provision of an Executive Summary as a press release or articles in farming and other industry press, and through use of the Department’s and LMC’s web-sites.

2. The Committee recommends that the LMC develops and publishes a concise ‘protocol’ in which the purpose, level and frequency of LMC contact with the meat processing industry is defined. Contacts should be monitored and the protocol reviewed in light of actual events, with a clear position report published at least once a year.

3. The Committee recommends that the LMC embarks on a series of structured producer meetings, in consultation with farmers’ representative organisations (both at general and sectoral level). In order to reduce costs, the Committee recommends that DARD facilitates these meetings in its accommodation throughout Northern Ireland. Producers must also play their part through participation and a willingness to learn about the LMC’s activities and to pass on this information to fellow producers.

4. The Committee also considers that there is much merit in the proposal to develop an agricultural forum, in order to structure the relationship between the LMC, NIMEA, producers, consumers and all interested parties. The Committee therefore recommends that DARD facilitates discussions among the interested parties regarding the development of such a forum.

5. The Committee recommends that the LMC takes urgent and clearly defined steps to improve its relationship with the National Beef Association and to include their views in discussions on the Red Meat Strategy and the Farm Quality Assurance Scheme. The LMC should also formalise and improve its relationships with the National Sheep Association to ensure the widest perspective in sheep and lamb-related matters.

6. The Committee recommends that more use is made of the LMC Bulletin and articles in the farming press to provide immediate and specific updates of the LMC’s activities. In this way, the Committee believes that farmers would consider themselves to be more involved and better informed. Opportunities also exist to link IT training for farmers (and their families) to IT-accessible information from the LMC. The Committee recommends that these are explored in conjunction with DARD.

7. The Committee recommends that DARD proceed with the necessary legislative changes to allow for future increased levy rates but that the LMC increases the current rate only in line with inflation from 2002/03. This increase could then be made annually and would be anticipated by producers. If, and only if, parity of prices with GB is obtained, the LMC should propose an increase in levy to achieve parity with levy charges in GB. If the current price differential reduces and remains stable, there may be an argument for some increase towards GB levels, proportionate to that reduction in differential.

8. The Committee recommends introduction by DARD, at the earliest opportunity, of the legislative base for payment of processor levy. As part of this exercise, DARD must satisfy itself, through careful consideration of LMC records, that the current method of levy collection is transparent, workable and unlikely to result in the levy being passed back directly to the primary producer. If DARD is not satisfied, then it should, through the legislation, insist on the adoption of a more appropriate methodology.

9. The Committee recommends that the LMC intention to extend levies and collect these at livestock markets is taken into account as new arrangements for animal sales and movement are considered by DARD. The Committee further recommends that the intention to extend levies (and the rationale for the extension) is clearly stated, with a start date no sooner than April 2002. This will require appropriate legislative changes to be brought forward by DARD. It is the Committee’s recommendation that the new levy is set at a lower rate than the slaughter levy but that it should be commensurate with benefits from LMC activities, which the LMC should quantify and publicise as part of the advance notice referred to above.

10. The Committee recommends that DARD, in agreement with the Executive, should provide ‘mainstreaming’ of marketing support to the LMC in its budget. This would allow strategic development in this vitally important area. The level of such support should be determined through analysis of the activities and results of implementation of the red-meat strategy so far, and would be in the context of a clearly defined marketing strategy. The Committee further recommends that the costs/expenses of LMC members should be met immediately by the Department, to bring Northern Ireland into line with Great Britain.

11. The Committee recommends that, since expenditure of even small amounts of Treasury match funding for discrete marketing projects would be a tangible return for funds modulated from farmers’ premia, DARD should consider carefully the provision of Treasury match funding to the LMC to enable them to undertake such actions.

12. The Committee recommends that DARD take the lead in negotiating with existing agencies involved in meat promotion (and, in time, with the new ‘super-agency’) to ensure joined-up government and that a partnership approach, with full LMC involvement, is adopted.

13. The Committee recommends that the LMC should build in a much greater degree of separation, and transparency, in their activities, whether through setting up a separate company for classification or by internal re-organisation. Charging for the classification service should be entirely separate and funds should relate only to the provision of that service, i.e. the service should stand alone, both organisationally and financially.

14. The Committee recommends that DARD perform more regular formal checks (at least annually) in accordance with procedures adopted by the EU Committee (i.e. a panel of DARD staff performing personal classification and agreeing a ‘committee’ classification, against which the classifier’s grade is measured). LMC should state its aim for a 5% incorrect classification margin, in the context of the 20% permitted, and disseminate the actual results quickly and widely to stakeholders. The Committee is not recommending that an individual officer’s performance should be publicised, merely that the overall result of the service is available for all to see. Results should, however, be used internally by the LMC for training purposes.

15. The Committee recommends that plant managers should make appropriate arrangements for farmers to view, on request, the grading procedures and that the LMC maintains records of reports of any failing in these arrangements. The LMC should also consider whether additional training for its staff would be useful, for example interpersonal skills, to assist classifiers meet additional demands.

16. The Committee further recommends that DARD, as the ‘competent authority’ under European law regarding the classification of beef carcases offered for sale, must instigate an immediate, thorough and highly transparent inquiry into meat plant practices following carcase classification. The Committee believes that there must be absolute confidence in these practices to protect the integrity of Northern Ireland beef.

17. The Committee recommends that the LMC communicates more clearly with producers regarding the standards applicable to grading. This should specifically target infrequent users of the service and should include more live grading demonstrations to groups of producers. The Committee also recommends that DARD should provide specific training to producers.

18. The Committee firstly recommends that the LMC investigates the practicalities of putting secondary full or spot-check grading in place in cases where Aitch-bone hanging is in operation. These cases should be known in advance by plant management, and the LMC advised to allow planning. Secondary grading would provide at least some reassurance for producers, where they currently have no recourse to the appeals procedure, that the grade given to their animals was fair and reasonable.

19. The Committee further recommends that the appeals process is reviewed in consultation with the producer sector and that a first level appeal to the original grader is introduced. The LMC has undertaken to listen to alternative suggestions on the appeals process and it is imperative that producer representatives offer realistic solutions, rather than simply say “something should be done”.

20. The Committee’s final recommendation in this section is that the LMC should extend its record keeping of appeals and perform analyses of them. For example, the frequency, type and location of appeals, and appellant farmer-type, could be considered, and results of the analyses disseminated in the Annual Report.

21. The Committee recommends a two-strand approach. Firstly, the introduction of a technologically improved mechanical system on a trial basis in one or more Northern Ireland meat plants. Secondly, negotiation with DEFRA and the European Commission regarding a review of alternative systems, such as the Australian model, and on reviewing the current links between grading and price reporting.

22. The Committee repeats its previous recommendation that meat plants must make changes to their pricing structures and urges the LMC to broker a ‘deal’ on this matter with all haste.

23. The Committee recommends that the LMC should provide prior notice and information about specific promotional activities. It should then provide timely feedback and evaluation of these activities. This clear communication with producers and other stakeholders (through methods recommended earlier in this report) will result in a greater understanding of the benefits to producers and others. This should also apply to existing activity – an example being greater clarity in what is being bought through the LMC’s contribution to the Meat and Livestock Commission.

24. The Committee recommends that the LMC reviews its Northern Ireland activities, with a view to developing a local promotional campaign to increase the use of NI beef and lamb, both in catering and domestic outlets.

25. The Committee recommends that the LMC maintains its relationship with the MLC and negotiates an extension to its current agreement.

26. The Committee recommends that the LMC reviews its international strategy, particularly its attendance at international fairs, in order to identify less costly methods of maintaining the important contacts with potential customers. The LMC should also give serious consideration to skewing resources, in the short term at least, from international to Northern Ireland promotion.

27. Despite NIMEA’s protestations, that neither LMC nor political approaches should be made to retailers which would affect relations between retailers and suppliers, the Committee recommends that the LMC explores all possibilities of involving retailers and availing of their expertise when planning and undertaking promotional activity.

28. The Committee recommends that the LMC board is expanded to nine with producer representation increased to at least three and preferably four. The LMC, together with DARD, should consider the implications of having current meat plant directors on its Board. They should also draw up and publish a code of conduct for members regarding their behaviour towards, and contact with, their own sector.

29. The Committee recommends that DARD engages with the Chief Executive and Chairman of the LMC to develop a full ‘balance of competencies’ required on the board. This should reflect the qualities outlined in the LMC submission to this Inquiry. It should also be subject to consultation with the industry and the agreed version widely publicised. DARD should also use this balance of competencies to draw up the specification required for each individual vacancy, so that the balance of skills is maintained. No formal qualifications should be required unless absolutely necessary to a particular vacancy.

30. The Committee recommends that future vacancies are advertised in the agricultural press as well as the Belfast newspapers, and that all electronic and other means should be used to ‘trail’ the appearance of these advertisements for a 3-4 week period before the adverts are placed. The Department should also ensure that all producer organisations known to it are informed of forthcoming vacancies.

31. The Committee recommends that DARD should review its own non-Departmental Public Bodies, and seek advice about others, to establish whether or not the current salaries paid to members are consistent with similar appointments across Northern Ireland.

32. The Committee further recommends that the Department should draw up a timetable for changes to the LMC and begin the appointments process immediately, taking into account the recommendation made earlier regarding the balance of competencies.

33. The Committee recommends that the Department should introduce procedures whereby payment of salary is dependent upon attendance at board meetings and/or involvement in ‘external’ LMC activities.

1.1 The Committee, during their meetings on 23 February and 2 March 2001, deliberated on potential subjects for Inquiry.

1.2 In view of the widespread occurrence of constituent comment on the Livestock and Meat Commission (LMC), particularly with regard to the classification services provided by the LMC, members agreed to consider a number of aspects of the LMC’s operation.

1.3 During the meeting on 9 March 2001, the Committee agreed the following Terms of Reference for the Inquiry:

The Committee for Agriculture and Rural Development has agreed to hold an Inquiry into Certain Aspects of the Operation of the Livestock and Meat Commission (LMC). The Committee wishes to investigate the following:

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 classification services in both the beef and sheep sectors;

The Department’s appointments to the Livestock and Meat Commission, including re-appointments.

In so doing, the Committee will wish to take account of the results of a 5 year review of the Commission, carried out by the Department of Agriculture and Rural Development in accordance with Government requirements for the management of Non-Departmental Public Bodies.

The Committee will also seek the views of the LMC, the Department and, in particular, those of the relevant sectors of the agricultural industry that are affected directly by the carcase classification systems.

2.1 The Committee agreed that it would place a public notice in the three main Belfast newspapers and issue a press release which would alert the public to the Inquiry and invite submissions from interested parties.

2.2 The Committee further agreed to seek written submissions from the following seven organisations: Department of Agriculture and Rural Development (DARD), Livestock and Meat Commission (LMC), Ulster Farmers’ Union (UFU), Northern Ireland Agricultural Producers’ Association (NIAPA), Northern Ireland Meat Exporters’ Association (NIMEA), National Beef Association (NBA) and the National Sheep Association (NSA). Copies of their submissions are included in Appendix 3 to this Report.

2.3 Apart from the organisations specifically targeted for a written response, the Committee received a number of requests for information from the public about submitting written evidence. However, only one of these resulted in a submission and this is also included at Appendix 3.

2.4 In addition to these written submissions, the Committee agreed to call the same seven organisations to give oral evidence, in order that the Committee might explore the submissions further. Evidence sessions were held on 6 and 27 April and 4 and 11 May 2001. Transcripts of these sessions may be found in Appendix 2 of this Report. Following consideration of this evidence, the Committee sought further written answers to additional questions (see Appendix 3).

3.1 The Committee would like to thank all those who participated in its Inquiry, whether through submission or in person. Particular thanks must go to the Board members and staff of the Livestock and Meat Commission who gave their full co-operation throughout the Inquiry, providing full, and frank, responses to the Committee’s questioning.

3.2 The Committee acknowledges the breadth of information provided by those who responded to the Inquiry. Where the Committee felt that publication of particular documents (or extracts of documents) did not add value to the Report, or was not appropriate, these have not been printed with the Report. However, a list of “Unpublished Memoranda” is provided at Appendix 4 and copies of the papers have been lodged in the Assembly’s library.

Note that written submissions were sought from a number of organisations, including the Northern Ireland Agricultural Producers’ Association (NIAPA). Two separate sets of submissions were made to the Inquiry from those claiming to represent this organisation. For the purposes of this Report, the organisations are shown as ‘NIAPA’ and ‘NIAPA Ruling Council’.

4.1.1 The LMC is similar to other levy-funded meat and livestock bodies in the UK and other EU member states in that its most regular critics are producers. If more is not done to avoid this, then the LMC’s potential to work for the benefit of producers, processors and retailers will be undermined.

4.1.2 The LMC can communicate more easily with small groups of processors or retailers than it can with a highly fragmented body of farmers. Producers must be fully represented by their own organisations who should keep their membership fully in touch with LMC strategy and industry thinking.

4.1.3 It would be beneficial for the LMC Board to hold more direct and regular consultations with producers in open forums, perhaps in the style adopted by the newly-formed Food Standards Agency, and the NBA would encourage it to do this.

4.1.4 Farmers should look upon the LMC as their organisation and be encouraged to use, rather than abuse them. The LMC are employed to serve the farmer as well as the rest of the meat industry and farmers should pressurise and dictate to the LMC.

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

4.2.2 There should be targets set (for the LMC) and full accountability if targets are not met.

4.2.3 The NSA would welcome closer relationships with the LMC. In particular it feels that there should be regular meetings with the sheep industry – two representatives each from the NSA, Ulster Lamb Groups, NIAPA and UFU.

4.3.1 A quinquennial review of the LMC was carried out by a Steering Group and a preliminary report of that Group’s findings was circulated for further comment by the industry. The UFU received no feedback, from DARD, on its submission.

4.3.2 The UFU is concerned at the length of time taken between five year reviews of the LMC and recommends that they should be conducted every five years to enable stakeholders to appraise the LMC’s performance.

4.3.3Following debate on this review the UFU concluded that no other body currently existed in Northern Ireland that could satisfactorily adopt any of the roles performed by the LMC.

4.4 The Northern Ireland Agricultural Producers’ Association (NIAPA) Ruling Council stated[4] that:

4.4.1 The LMC is supposedly independent and impartial but in effect is perceived by many primary producers as being more aligned with the needs and objectives of the processing industry.

4.5.1 NIMEA expresses concern that the result of the recent quinquennial review of LMC has not been published.

4.6.1 The Quinquennial Review Report was completed during the period when the Assembly was suspended and the Report was circulated at that time to all those who had contributed to the Review. The main findings and recommendations were largely agreed by them. The Minister will be publishing the Report in the context of the outcome of (the Committee’s) investigations.

4.6.2 The work (on the quinquennial review) was undertaken around 1999. Therefore, the Minister expects the next quinquennial review to be starting around 2004.

4.6.3 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 ... and is broadly representative of the industry at commission level. The Minister notes 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.

4.7.1 The quinquennial review carried out by DARD was initiated in the autumn of 1998 and Commission members have repeatedly expressed their disappointment that it has not yet been published.

5.1.1 If the LMC’s income could be secured other than through levy, improved communication with producers would result. DARD, the processors and EU funding should be used to boost the funds required to run the LMC. The LMC acquired European money for promotion of the export of beef. At present, meat needs to be promoted at home.

5.1.2 It is worth supporting the LMC if that body is performing well and the NBA would encourage producers not to resist a levy increase if the LMC was doing a good job. Indeed, such an increase could be described as sensible given the possibility of an easily identified and substantial return. However, producers would not currently be positive about an increase because of low returns from low prime cattle prices and farmers cannot be expected to pay more levy in their present financial circumstances.

5.1.3 There should be no annual review of levy payments as ... this would undermine the relationship between the Commission and a principal source of its funding. It would be more sensible to agree to levy payments being increased annually on an index-linked, inflation-proof basis – although provision should also exist for the Commission to approach the industry whenever it wished if it felt moved to put forward ideas for entirely new projects and seek additional funding for them.

5.1.4 The NBA welcomes an income contribution from the processors as they have benefited from producer-assisted LMC efforts and promotional activities. However, producers are concerned that this contribution will result in a matching reduction in the price of prime cattle, effectively resulting in their paying an LMC levy twice. The NBA suggests that alternative ways of securing processor funding be found, preferably in direct proportion to profits.

5.1.5 It is the NBA’s view that NI producers would prefer the LMC, which is closer to the farm gate than the MLC, to remain in this position and not to become as sleek, suited and distant from mainstream farming as the MLC has become since its promotional work has taken it closer to corporate, retail and marketing environments.

5.1.6 Because of EU constraints on the management of marketing funds (which allow only generic promotion) and the fact that GB is only 75% self-sufficient in beef, any rise in consumption as a result of successful promotion automatically means an increase in imports.

5.1.7 The NBA fears that the future of Northern Ireland’s beef industry is more likely to be driven by the hunger of factory owners with spare packing capacity to import either sides or primals for de-boning and packing from a range of non-NI sources than it is by their hunger for live NI cattle for slaughter. As a result, the payment of realistic prices for live cattle will be of secondary interest. If this is correct, then Northern Ireland’s cattle numbers will continue to dwindle and the income of the LMC with it.

5.2.1 LMC funding is inadequate but the NSA is doubtful if producers could afford to pay higher levies.

5.2.2 The NSA feels that a processor levy may be paid indirectly by the producer, as has been the case in the past. It would be better to involve processors in promotional work, with processors incurring costs at that end. If a levy is done on a cost per lamb basis it will be passed directly back to the producers.

5.2.3 Levy is currently collected on 559,100 lambs. If levy was collected on the numbers of ewes, all producers would be contributing, rather than only those selling lambs deadweight in Northern Ireland. The amount of levy collected would also be increased. Those who sell their lambs live and therefore do not currently pay levy would, as could be expected, not like the introduction of a wider levy.

5.2.4 The NSA acknowledges that, even with the increased levy, the sum collected would be insufficient to undertake a meaningful promotional campaign. However, it would be greater than currently available and could be used in conjunction with some of the beef levy.

5.2.5 The NSA asks whether rural development funds, siphoned off from modulated Sheep Annual Premium payments, could be used for LMC activities. The money is going out of the sheep industry and the NSA feels strongly that it should be spent on something that will benefit the sheep industry. The NSA also asks whether or not EU funds could be used for lamb promotion.

5.3.1 The UFU would be reasonably satisfied with the openness of LMC with regard to its funding sources. The 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.

5.3.2Regarding the funding mix, it is inevitable that each component of income may not necessarily be used to fund activities in that area. For example, money available for lamb promotion would be fairly limited if that activity was curtailed to levy income generated from sheep alone.

5.3.3 At this stage, any increase in levies to be collected from producers would be totally unacceptable.

5.3.4 Given the increasingly challenging market places in which the local beef and sheep sectors must compete the resources required to capitalise on and develop new market opportunities are likely to grow. For this reason, a review of levy payment rates for both producers and processors should be conducted on an annual basis in consultation with industry stakeholders.

5.3.5 The UFU cannot be sure that the levy paid by the processor is not passed back to the primary producer. However, the UFU believes that it is beneficial for the processors to pay levy.

5.3.6 The UFU believes that levies should only be collected on finished animals at point of slaughter and does not support the introduction of a levy on dropped calves, or on exports of live animals, at present. These alternatives have been dismissed as unworkable.

5.3.7 There should be lots of funding given to the LMC to promote beef. It receives some promotional money from Europe but the sums are nominal.

5.4.1 Although an increase in levy may be necessary, as the industry needs to ready itself for increased exports, the timing is inappropriate given that farmers’ incomes are virtually nil. Farmers’ expectations for the LMC’s output would need to be met before they would agree to any levy increase.

5.4.2 In addition, it would be ridiculous to impose a levy increase on farmers against the backdrop of increasing imported product.

5.4.3 Levy reviews should not be annual. A three year review period would allow a balanced analysis of environmental and economic factors.

5.4.4NIAPA’s dialogue with the processors resulted in their agreement to a voluntary levy, which equates to the levy provided annually by producers. All producer contributions come from the efforts of primary producers. However, from 1967 to 2000 the processors made no contribution to the LMC and their involvement now is important.

5.4.5 It must be realised that government provides no core funding to the LMC even though it is a non-Departmental Public Body. Processors should assist the LMC to a greater extent through a procedure related to profitability.

5.5.1Members would certainly not welcome an increase in the LMC levy at this time.

5.5.2 Any so-called (processor) levy would almost certainly be laid off or discounted against the returns to the primary producer by way of additional charge by the processor.

5.6.1 NIMEA would fully support government funding of LMC equivalent to the support from the ROI Government to Bord Bia. NIMEA also understands that the government pays the Meat and Livestock Commission (MLC) Commissioners’ expenses and fees. If we are to compete in the available market, then government-assisted promotion similar to that enjoyed by competitors is essential.

5.6.2 The LMC should be able to attract and utilise the amount of government money currently spent by other government agencies meddling in the area of meat promotion. All these bodies have money for the promotion of meat or lamb products, either in the UK or in other EU states, but there is no co-ordination. All such activities should be spearheaded, collated and pulled together in one driving force that represents Northern Ireland. The LMC, along with the people who sell the produce, understands exactly what is required in relation to quality and customer requirements in the wider world meat markets, and should be that spearhead body.

5.6.3 When the rates of promotional levy funding obtained by competitors in the GB and ROI are compared to that obtained in Northern Ireland we are by far the poor relation. Levy funding must come into line with GB and should be at the level of around £3 rather than 80p. The current rate of levy contribution to the body which carries out the generic marketing function demonstrates that producers themselves do not have the desire to promote their own product. Returns will be commensurate with the promotional investment.

5.6.4 Funding should be generated in the same percentage basis as in GB between producer and processor. While it may appear that the producer is paying the lion’s share ... that is not the case, because funding retailer promotions is a matter directly between plants and retailer and outside the generic promotion by LMC. The producer is always the beneficiary of positive promotional activity no matter who pays.

5.6.5 An annual review of levy rates would be advantageous to take account of competitive factors in other countries.

5.6.6 Farmers who choose to operate through livestock markets do not contribute to LMC operations but demand attention from the LMC. The movement of half a million sheep to ROI evading the LMC levy also needs to be addressed. It is NIMEA’s opinion that, as in Australia, the government should introduce a ‘transaction levy’ to be applied every time livestock (cattle and sheep) are sold through a market. This would be at a lower rate than the slaughter levy and would mean that all producers ... would be contributing to the promotion of the product in which they were involved.

5.6.7 The (Committee’s) comment that farmers are “paying for the Commission” is hurtful, inaccurate and discriminatory in light of the voluntary contribution being made by the processors. It clearly again displays (the Committee’s) lack of understanding to appreciate or recognise the vast amounts of money, time and activity being invested annually by individual processors to simply retain their current markets. It also ignores the fact that the farmers are the largest and main beneficiaries of the Commission’s activities.

5.6.8 Due to the excellent promotion work being done for the product in our main export markets the processors agreed last year to contribute a voluntary levy to LMC of £1 for each animal slaughtered (10p per sheep). The voluntary agreement was entered into as the devolved administration was not yet in place for the necessary legislation to be introduced to implement a processor contribution in line with GB and ROI.

5.6.9Deductions made from producers in respect of LMC levies are clearly indicated on the payment documents and the processor contribution would be clearly paid from company accounts. It can therefore be clearly demonstrated that producers were not funding the processor contribution.

5.6.10 In terms of promotional funding it is important to look at the markets, where they are going and the competition. An amount five times that available in 1998/99 might still not be enough. Value for money must be a focus and it is for the LMC to spend the money wisely.

5.7.1 The Department is supportive of the need for increased funding for the LMC as indicated in the quinquennial review. That review report notes the wish of the LMC to extend the scope of the levy to producers other than beef finishers. When that is taken forward the Minister would expect the LMC to specify where the levy should be targeted and how much funding might be raised. The Minister will then consider the need for legislation.

5.7.2 The specific functions and responsibilities of the LMC are set out in legislation – the Livestock Marketing Commission Act (Northern Ireland) 1967. The core functions of the LMC are to provide services to the Northern Ireland red meat industry and to advise the Department on matters relating to this sector. As such the LMC is acting on behalf of the industry and it is entirely appropriate that the core funding should come from industry rather than government. This position is consistent with that of the GB Meat and Livestock Commission (MLC).

5.7.3 Although not providing core funding, there has been funding provided related to specific programmes or projects. For example, £2m was provided by the Department to the LMC for implementation of the Red Meat Strategy while previously £250,000 was provided for red-meat marketing support in the aftermath of the BSE export ban in 1996.

5.7.4 Given the clear differences in levy arrangements between Northern Ireland and GB there is scope for levy income to be increased.

5.7.5 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 effected by subordinate legislation. Any extension of the levy system to other parts of the food chain would require primary legislation.

5.7.6 The Minister notes that processors have begun to pay a voluntary levy and this will be given statutory effect in due course. DARD cannot interfere in any commercial decisions by any private companies (when asked how DARD would ensure that a producer levy would not get passed back to the producer).

5.7.7 The Minister is prepared to consider the costs of Commission members being met from public funds though she would wish to have clear reasoned arguments as to why this is appropriate at this time.

5.7.8 When the LMC had built up significant surpluses, the Minister believes it was entirely appropriate that the reserves be used for the benefit of all in the industry. The surpluses from classification fees were used solely to offset the costs of the Farm Quality Assurance Scheme, thereby benefiting the very same group of producers.

5.7.9(Quotation from the quinquennial review report, which was attached to the Minister’s submission) “Although current legislation provides that the levy should also be payable by the owners of cattle and sheep exported from Northern Ireland, in practice the levy has not been collected on exports. Arrangements are in place in both GB and ROI to collect levy on their exports and it is noted in LMC’s Strategic Plan that the Commission plans to introduce measures to collect the levy at live markets.”

5.7.10 (In answer to a point raised by the National Sheep Association as to whether money modulated from Sheep Annual Premium could be used to support LMC activities) It is unlikely – the Department can only carry out what is contained in the rural development plan. That is unlikely since that was not in the plan.

5.7.11 (In answer to a question on funding for the red meat strategy coming to an end in 2002 and DARD’s proposals to continue that funding) The Department has given no commitment to do so, but will keep it under review and make a decision at the appropriate time. If necessary, DARD will seek funding.

5.8.1 Prior to the BSE crisis in 1996 the LMC had built up considerable cash reserves. At that time the focus of LMC marketing and promotion was in export markets (with very little activity in Northern Ireland and virtually nothing in GB). An evolution towards activity in both NI and GB has resulted in increased expenditure. Reserves have also been run down through not seeking increases in levies between 1998 and 2000.

5.8.2 Cash surpluses are now almost depleted. There is now a significant deficit between income and expenditure based on on-going activities. The choice will be either curtailment of activities or increasing resources available from the industry. It will be the LMC’s objective to deliver the best value to our industry with whatever funds industry or Government provides.

5.8.3Commission members have not yet given detailed consideration to the areas of LMC activity that might be curtailed if additional resources are not made available. The current year (2001/02) budget broadly sustains activities at last year’s levels but cash balances will be run down to a minimum level. It follows that there will be curtailment of activities under “Information Services”, “Agriculture” and “Marketing and Promotion”. As marketing and promotion expenditure is significantly greater than the other two combined then curtailment will have to fall most heavily on this area.

5.8.4 Within marketing and promotion the budget is split into three roughly equal parts: Northern Ireland, GB and Export. The NI focus is primarily on educating the local population regarding the benefits of red meat. The impact on farmers of ceasing this work may be modest in the short term. However, if we do not seek to sustain current eating habits and build similar habits in the next generation, then consumption levels will slip and this will prove difficult to reverse. The agreement with the MLC allows us to benefit from the £13.8m annual promotional budget for beef and enjoy the use of the “British Beef” brand. If NI producers lost the premium (multiple retailer) market segment through not renewing the agreement, the LMC estimates that NI producers would lose 10p per Kg from finished cattle prices. Current investment in export marketing could be deemed to have no short-term impact on beef producers. However, the process of building and sustaining relationships with past and potential future customers is important. The Commission will therefore have very considerable difficulty in determining where curtailment of expenditure should be applied.

5.8.5Surpluses from classification charges have never been used to support general LMC activities. Under an agreement set up in the early 1990’s they have been specifically directed towards the costs of running the NI Farm Quality Assurance Scheme. During 2001/02 the LMC anticipates that the classification service will have broken even and the 2001/02 budget anticipates that it will be loss-making at direct cost level. Sheep classification in particular has become significantly loss-making.

5.8.6 The LMC confirms that a voluntary levy from the slaughtering companies has been in place since July 2000. It is the LMC’s understanding that DARD is in the process of introducing legislation to give statutory effect to this source of income for the LMC.

5.8.7 The LMC believes that the processors’ decision to pay this levy was influenced by several factors: all of the major processors have sought and gained assistance from LMC in dealing with particular markets or customers; the need for equivalence within Northern Ireland to the contributions paid by their GB counterparts to the MLC; agreement under the Red Meat Strategy that both producers and processors would jointly fund the industry portion of expenditure; and a recognition by the processors of the work carried out in NI, GB and export markets.

5.8.8 In terms of the processor levy being passed back to producers, this levy should be put in the same category of processor costs as electricity, rates, labour etc. In a free market, the distribution of margin throughout the chain will be based on the competitive forces operating. As there has not been a reduction in producer price against sales value since the levy began (in fact the opposite) the LMC is confident that the cost of the voluntary contributions has not been passed down to the farmer.

5.8.9 Primary slaughterers are providing a voluntary contribution to LMC, the LMC has almost completed an agreement on Farm Quality Assurance funding and the LMC had hoped not to deal with classification this year. The LMC’s strategy was built around not having any additional levy income or uplift in classification until next year.

5.8.10.The Foot and Mouth outbreak has implications for funding in that the LMC is not generating as much income as was budgeted. Others’ problems created by Foot and Mouth are, of course, far more important.

5.8.11 While the Department is responsible for setting the level at which statutory levels are applied, they do not provide any core funding to the LMC. However, under the Red Meat Strategy agreement, funding from Treasury was made available through DARD as 50% of an agreed programme of expenditure over a three year period. In addition, there was £250,000 of support at the onset of the BSE crisis. Apart from these instances, there have been no other occasions when LMC received government funding.

5.8.12 The LMC notes that the MLC in Great Britain receives support through the funding of the costs of Commission members by MAFF. The LMC believes that both the Welsh Development Agency and the Scottish Executive provide some support to Welsh Beef and Lamb Promotions Ltd. and Quality Meat Scotland respectively.

5.8.13 The LMC also notes that An Bord Bia in the Republic of Ireland continues to receive very significant government support, which is fully cleared by the European Commission under State Aid Rules. They have a national development plan under which they are able to provide substantial funding. Out of a £IR20m budget, some £IR14m comes from Government in some form or other.

5.8.14 The LMC has not considered an approach to government for core funding. The LMC agrees … that such funding, dependent on its quantum, would indeed be helpful in shielding farmers from requests for additional contributions.

5.8.15 If money was to be made available to the industry, there is the political question of whether it is justifiable to assist in the promotion of meat against other competing priorities.

5.8.16.There are organisations like the LMC in most significant meat-producing countries in the world and most are funded through levies applied to the industry, usually at point of slaughter but, in a number of instances, as a transaction charge on every livestock transaction throughout the chain.

5.8.17 It is currently part of the legislation on levies that livestock leaving Northern Ireland are eligible to pay. However, the LMC has no practical or economic means of collecting such levies and they remain substantially unpaid. The main loss is in regard to sheep and the LMC anticipates that legislation requiring the collection of this at livestock marts is the only viable solution. This ‘transaction levy’ would require a payment on each occasion when livestock changes ownership, whether at a slaughter plant or at an auction mart. This system operates quite successfully in Australia.

5.8.18 The approach of generating income by imposing a levy on every bovine and ovine born in Northern Ireland has been considered. The benefits of LMC activities are argued to accrue to all producers throughout the chain and the LMC had concluded that it would be a laudable objective to spread wider the burden of funding these activities. Implementation is, however, exceedingly difficult and it may be cumbersome to collect such levies until the animal is ultimately presented for slaughter.

5.8.19 The LMC is pleased to report that industry agreement has been reached whereby the Farm Quality Assurance Scheme is being upgraded to achieve EN 45011 accreditation and that a more sustainable funding arrangement has been put in place. Producers will be asked to subscribe £35 per annum as a membership fee and processors will contribute a membership fee equivalent to £1 per animal for every animal slaughtered on their premises. This will generate sufficient funding to fully meet the scheme’s costs (around £750,000 per annum).

5.8.20 In summary, the funding of LMC has, and will continue to be completely transparent to the industry. The Annual Report is available each year to any industry participant on request to the LMC Secretary. It is important that debate is encouraged to ensure that the LMC is held properly to account for the value it is expected to add to the industry. It is also important that expectations are set at a level commensurate with the resources made available.

6.1.1 The results of classification, particularly where ‘demotion’ into lower grades means less income, will inevitably prevent many producers from taking as positive a view of the LMC as they ought. The LMC has a thankless job running the classification service.

6.1.2 The development of the LMC’s relationship with farmers is hindered by routine antagonism by farmers who feel aggrieved at levy payments and what they regard as harsh carcase classification.

6.1.3 If the LMC could be separated from its current classification function, or if the aggravation surrounding classification could be reduced, then more effective communication with producers would be possible.

6.1.4 It would be better from a public relations point of view if the LMC gave up the service. Their classification remit should be properly defined and presented to private companies for tender, with one company for Northern Ireland the best option for consistency and ease of management (not each factory employing its own classifier). Alongside such a structure, the LMC would take on the role of inspector, ensuring classification was operated correctly, and be in charge of disputes. This would apply irrespective of whether classification is determined electronically or by human assessment.

6.1.5 The NBA concedes that while classification remains a subjective exercise there will inevitably be criticism and disputes.

6.1.6 The NBA does not receive complaints about classification at small meat plants, although the same graders also work at the larger plants.

6.1.7 The senior grader who carries out appeals would say that the appeals procedure provided a truly independent assessment.

6.1.8 The 20% figure for wrong classification would not be tolerated in any other work area. Graders need to be held responsible for their actions, with their names put on each classification.

6.1.9 Aitch-bone hanging should be banned if there are suspicions that it is masking poor classification. It is the supermarkets and processors who are trying to go down that road. The practice allows fresh beef to go into the supermarkets sooner, but this does not help the industry. The whole carcase is distorted and appeals are not possible because of the shape. Beasts could be downgraded and once they are aitch-bone hung there is no way of getting the beasts upgraded again.

6.1.10 Graders would have it in the back of their mind that a meat plant manager is looking over their shoulder and managers would like to see a beast downgraded to pay farmers 6p less on the grade. In such circumstances a senior grader should check the beast but in cases where farmers do not follow their cattle through, the bad grade is noticed too late. There is, however, no encouragement for farmers to remain on-site to see their cattle graded. Indeed, ABP Newry actively discourages people from doing so. Another example was given of a farmer seeking an appeal but being advised that if he appealed, his cattle would not be taken.

6.1.11Automatic scanning machines, run by independent operators, should be introduced to replace graders, on a commercial basis, at the earliest opportunity. The NBA believes that, in trials, the machines more than held their own against ROI master graders on carcase conformation but failed to beat them on fat cover classification.

6.1.12 If mechanical grading came in, a classification/weighing charge of £1 per head would be fair because actual cost would be around 75p. Factories killing less than 75 cattle per week should be exempted from classification requirements. Some of the training costs could be met by a successful tendering company and the rest from a one-off government assistance programme. The installation costs should be met by the factory with the LMC being given central funds to cover its inspection.

6.1.13 The NBA believes that the current payment grids are much too complicated, and generate confusion. The numbers of grades should be reduced to U, R, O+, O- and P for conformation and 4,3,2 for fat cover. The principle behind this observation is that the differences between them are too fine – which is in direct contrast with the price penalties which are significant. For example, it can be shown in meat yield terms that there is very little difference between an R3 and an O+3 carcase, yet the latter is penalised by 6p per dwkg – or around £19 per animal.

6.1.14 The LMC should publish details, at individual plant level, regarding the prices for grades of animal killed. This should be compared to a production price, also prepared by the LMC, giving a simple comparison which is likely to show the loss margin for farmers.

6.2.1Classification in the lamb trade is slightly different than for other animals; it is graded in a different way. The grading system is more complicated than it needs to be. The taste and eating quality are more important and the EUROP system is only a guide to meat yield.

6.2.2Producers are improving the quality of their lambs but standards set seem to rise as quality improves.

6.2.3 Graders are only human and cannot produce as exact a measurement as a mechanical method would. Unfortunately the NSA does not know of an accurate and consistent mechanical method of grading at present but would be interested in seeing such a development.

6.2.4 The cost issue of introducing mechanical classification would be an important one to consider.

6.2.5 It would appear from members’ comments that a more lenient system of grading applies in the Republic of Ireland meat plants. A lamb in the South would be a grade higher than it would here. This might be surprising as the graders in the South are paid by the meat plants.

6.2.6 It would be helpful if the LMC could provide information on individual grades as well as the grading groups, as this is not very useful at the moment.

6.2.7 A star rating system indicating eating quality, such as is in operation in other countries including Australia, might be useful.

6.3.1 The LMC’s classification work is a major area of frustration to producers given the subjective nature of the exercise. It is the biggest issue at all producers’ meetings and in all conversations with processors and producers.

6.3.2 Most dissatisfied producers are those who slaughter animals only occasionally. Those who slaughter regularly are more skilled at selecting stock to the desired finish and slaughtering at the correct stage.

6.3.3 Farmers would complain less about classification if it were not so closely linked to the payment structure. The problem is not classification; it is the payment structure. In a study by the LMC it was found that the variation between some of the grades was only 1% although the cut in price was 6p.

6.3.4 The UFU is reasonably satisfied that classification has been reasonable over the most recent 18 month period. There was a tightening of standards (by DARD) following the most recent EU inspection.

6.3.5 The LMC’s standards are monitored by DARD and when last assessed were (approximately) 7% off the mark – to the advantage of the producer, not the processor.

6.3.6 The LMC is best placed as an independent body to carry out this service. It should also be remembered that the LMC does not set the standard – it is supervised by DARD which sets standards to meet EU regulations. If there are variations in classification then DARD should pick these up. It is not in the interests of the LMC to make the grading system advantageous to either producers or processors, although it is the UFU’s understanding that the producer is given the benefit of the doubt if there is any debate.

6.3.7 Moving responsibility for classification to another body will not eliminate the differentials and variations in grades, because of the system’s subjectivity.

6.3.8Comparisons with classification in GB and ROI are not conclusive – some producers say it is more severe, others that it was better suited to producers.

6.3.9 The UFU recommends that the LMC actively engages in the analysis of objective classification trials and introduces such systems into Northern Ireland at the earliest possible opportunity. However, there is concern that if further work is not carried out on the existing machines then it would not be to the producers’ advantage to implement them.

6.3.10 There is an interesting development in Australia (Meat Standards Australia Total Quality Management System) where meat is sold on taste, not grade. Meat is graded according to three different categories related to eating quality, through analysing critical control points in the production, processing and value added sectors. A conference on selling on taste and eating quality was postponed due to the Foot and Mouth crisis.

6.3.11 A simpler pricing structure is required. The UFU would like the Committee’s help in exerting pressure to have the number of payment bands reduced.

6.3.12 The grading appeals procedure’s practical operation is of concern. The existing procedure needs a fundamental overhaul to make it more ‘user-friendly’. In addition the UFU notes that aitch-bone hanging renders appeals impossible. However, the UFU acknowledges that it is difficult to go against the customer’s requirement that animals be aitch-bone hung immediately.

6.3.13 The UFU hopes that the processors do not have influence over grading standards. DARD should make sure that it polices the process properly.

6.3.14 Under the FQAS scheme some producers have the opportunity to see classification in other places and this should be beneficial.

6.4.1 Farmers believe that grading is getting tighter each year and that resources spent on improved breeding are to no avail. It also appears to farmers that seasonal grading is operated where grades are harder to achieve in an over-supply situation.

6.4.2According to a farming journal, the percentage of higher grades under EU classification is 50% higher in the Republic of Ireland than in Northern Ireland.

6.4.3 The LMC staff’s grades are reviewed by European graders and have found them not to be very far out.

6.4.4 There is a need to change the pricing structure operated by plants and it would be helpful for a proper analysis of pricing differentials between regions of the United Kingdom to be provided. There should be fewer grades, with processors paying a large amount towards the higher grades, thus rewarding the production to market requirements. The current system, with six price differentials, differs from the ROI and GB and dates from the time of intervention.

6.4.5 Twenty-five grades for a 20 Kg carcase (sheep) would seem to be a large number to identify. However, the issue is not grading – it is pricing and NIAPA have been lobbying for grades and prices to be grouped into three or four zones. The grading system is not used in supermarkets or butchers’ shelves. It relates only to paying the farmer and we all agree it is open to abuse.

6.4.6Mechanical methods of grading would be desirable but must be shown to provide uniform grading and to be tamper-proof. It would remove the element of variability and NIAPA would advocate a pilot scheme for its use. An example was given of a scanning machine trial in which five or six hundred lambs were scanned before slaughter. Fat grade results were more than 90% accurate.

6.4.7 NIAPA believes that the LMC should initiate more live grading demonstrations to give farmers a better understanding of live and slaughter carcase information.

6.4.8 Other systems, such as the Keenan Keepack system, which uses a nutritional system as well as the grading and conformation, should be considered. It achieves consistency in eating quality. Australia has a star system for the eating quality of beef.

6.4.9 There is an important management role in ensuring consistency of the grading service provided by LMC personnel. Staff are experienced and capable but efficiency can be less than adequate. Consistency can be a problem if more than one grader is involved in grading a batch of animals. Human nature also dictates that a grader’s mood might reflect his grading.

6.4.10 Farmers who slaughter cattle every week observe the grading system and would be positive about it. Farmers who slaughter perhaps once a year might not be so objective and may feel aggrieved by the grades achieved. It is also possible that farmers with a lot of stock may build up a rapport with the graders over time.

6.4.11 Farmers should be encouraged to learn from bad grades. For example, they might pick lambs earlier the next time they bring them to slaughter. Many farmers are reluctant to go to a meat plant to see their animals graded but problems may be solved if they did.

6.4.12 There needs to be a proper appeals system whereby the appeals grader does not feel pressure to stand by the original grade. The appeals system needs to be credible to producer, grader and processor and should be independent.

6.5.1 NIAPA Ruling Council cannot offer information on grading comparisons with the Republic of Ireland or other UK regions but there is no doubt that members are acutely aware of the subjective nature of grading and generally dissatisfied with the present variable standards.

6.5.2Members would welcome a mechanical approach to grading, on the understanding that this methodology would be both accurate and fair to producers.

6.5.3 NIAPA Ruling Council is not in a position to comment on the competence or otherwise of LMC staff other than to comment on the obvious subjectivity of the present grading procedure.

6.6.1Classification is a statutory EU requirement with which all member states are obliged to comply. When government decided to privatise the classification service in 1990 the entire industry asked the LMC to take on the function. It performs this service under the supervision of the competent authority (DARD).

6.6.2 To fully appreciate the debate on classification, the full EU classification legislation has to be read, understood and appreciated. Classification is much more than just applying a grade to an animal. The legislation includes the checking of weighscales, confirmation of accurate weight, confirmation of the carcase dressing specification and the determination from carcase inspection of the correct category of carcase (steer, heifer, cow, bull or young bull. The LMC is still accepted as the most independent means of performing this function.

6.6.3Classification by its very nature is a controversial issue and, as an independent body, may well be better without the task in the interests of developing transparency in the supply chain. The provision of this service has resulted in the LMC being maliciously scandalised by various groups. NIMEA is concerned that the LMC’s promotional independence has now been tarnished as well. This may be an opportunity for the Assembly to establish ... a separate, exclusive and totally independent classification service, thus relieving the LMC of an extremely arbitrary function.

6.6.4 Despite cost benefits to larger plants in providing their own classifiers, (as permitted under the EU legislation) NIMEA believes this would not be seen as independent and NIMEA has no desire to change until a more professional body or method displays itself. NIMEA would ask whether it is better to have one body in Northern Ireland doing the job to a single monitored standard, rather than a plethora of bodies trying to operate a national standard.

6.6.5Individual classifiers are mostly from farming backgrounds and at times lean towards the producer rather than administer strict EU standards. However, on the whole, NIMEA members would agree that the LMC has provided a professional classification service but perhaps not as rigid or consistent at times as the service provided by MLC in GB. 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. The difference is that the benefit swings to the producer.

6.6.6 NIMEA members have operations in ROI and GB and are well placed to compare classification in all three regions. In the main the system operated across the two islands is relatively parallel. Because of the human element, there will always be small individual differences in the interpretation of standards but there are no wide variations.

6.6.7 The LMC could, perhaps, instil into its classifiers the importance of being an accurate, independent service. That is the mark of a competent classifier and it should also be noted that it takes ten years for a classifier to be fully conversant and confident in the job.

6.6.8 The EUROP grid classification has now outlived its usefulness and the industry needs to move to a more sophisticated method of evaluating carcase value and saleable lean meat. The problem is that carcases of sheep, pigs and poultry have similar size and weight etc. However, cattle have carcases ranging from 190 Kg to 450 Kg and there is not yet a more cost-effective or efficient method than the human eye. NIMEA believes that within 5 years this function will be more accurately performed by advanced technology and NIMEA members would welcome that advancement as soon as possible. A further problem is that the EC insists that any mechanical means must transcribe the results into the EUROP grid. This is a serious and unnecessary hindrance to the equipment’s development.

6.6.9 The LMC should forge ahead with developing an electronic grading system, forming a strategic partnership with an organisation that is pioneering work in the field. A number of countries and organisations are spending money in that area. If the industry got together and decided to bring these machines into Northern Ireland on a trial basis that would be a positive step. NIMEA would be willing to operate trials in its plants. 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.

6.6.10 As far as disputes go there is an appeals procedure in place for use by any party who disagrees with a classification result. NIMEA accepts that there has to be a final adjudicator. The appeal system should, in the first instance, be to the original classifier, and only after he refuses to change should the appeal be made to the Senior LMC official. He is regarded as an independent assessment as both he and the original classifier are both subject to standardisation exercises and control by DARD. While the final authority lies with DARD, the highest competence would be in LMC.

6.6.11 LMC classification staff attend plants in a “third party guest” role. They are at all times under the employment and management of the LMC and are under no obligation to the plant in which they operate. At times, however, there is considerable influence and pressure exerted on classifiers by producers to have carcases graded higher than warranted.

6.6.12 Those who oppose the classification system most ferociously are usually the “once-a-year” producers or the cattle dealers who are really out of touch with the normal flow of operations. The main complaints area is in the division between the O and R grades, which is also the dividing line between beef-bred animals and dairy-bred animals. It tends to be the mixed farmers with dairy-herd animals who appeal grades and who least understand the classification standards. It is NIMEA’s experience that the professional beef and sheep producer has briefed himself well on the classification system and understands the standards and accepts the limitations of the human element. This type of producer is also keen to adapt to supply what the market wants.

6.6.13 One member company’s experience is that, in England, 10-15 producers would be involved in slaughtering 300 cattle a day. At most, one or two would come to see their cattle graded by someone employed by a grading service or the plant itself.

6.6.14 The error rate of 20% quoted does not refer to 20% of all cattle graded. About 90-92% of all cattle fall into a box on the grid without any dispute. The remaining 8% are borderline cases, with points recommending them for a higher grade and other points pulling them into the lower one. In those cases, the classification skill comes in. The error rate is 20% of that 8%, not of all cattle.

6.6.15 In terms of grading, 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 engage in quality production in a serious fashion are not being appropriately rewarded. The meat plants pay what they can afford to, depending on the customers. It is an average price, ranging from £1.70 to as low as £1.30, but it is an average price every week. That is the way it works.

6.7.1 EU legislation introduced mandatory beef carcase classification from 1 January 1992. Similar legislation was introduced later in 1992 in respect of sheep. The purpose of carcase classification is to provide a basis for fair payment to producers and is carried out on the basis of conformation and fat cover in cattle and on meat colour and fat class in respect of sheep.

6.7.2Classification in Northern Ireland is carried out under a formal contract between the LMC and meat plants. LMC officers are licensed by the Department, undertaking a test for approval as a licensed classifier. The standards they apply are subsequently monitored by LMC senior staff, DARD technical inspectorate, IBEA and the EU.

6.7.3 All carcase classifiers are subject to supervisory checks by the Department at least twice per quarter. This is in addition to checks carried out by senior LMC field officers. DARD also holds standardisation exercises twice a year for those staff who spend less than 50% of their time on classification work. Over the past 2 years over 300 supervisory checks were carried out by the Department.

6.7.4 DARD will continue to supervise the classification system and will also continue to explain to producers the nature of both the classification system and the supervisory arrangements. In this, DARD will work closely with the LMC and producer representatives.

6.7.5 EU inspections in February and May 1998 found that beef classification standards were not being properly applied. Following this, the Department reviewed the classification by LMC staff ... and one outcome of this reviewwas that in marginal cases, producers were to be given the benefit of the doubt. Subsequent monitoring has ensured that EU standards are being properly applied. A further inspection visit in November 1998 confirmed this.

6.7.6(Quotations from the ‘Mission Report’ dated 7 December 1998 by the EU Control Committee on beef Carcase Classification) “The Committee was impressed by the high standards of classification found in all the plants visited. The majority of differences observed were within one sub-class.” “The Committee welcomed as well the frequent spot checks performed by the DANI as well as the LMC, to monitor the activity of the classifiers. Repeated inspections explain the good results of the classification; their importance is also highlighted by the practise of hip hanging hot carcases at the end of the kill line, thus making checks necessary prior to the new hanging method.” “Price reporting conforms with EC ruling ... The Committee was impressed by the thorough and regular controls performed in order to reconciliate with the plant records the prices supplied by the price reporting centres.”

6.7.7 On the basis of supervisory checks by the LMC, DARD, the Intervention Board and the EU Classification Control Committee, the Minister is satisfied that the standards are being applied fairly with the benefit of doubt in marginal decisions being given to the producer.

6.7.8 The current programme of visits to member states by the EU Classification Control Committee has been abandoned because of workload pressures arising from Foot and Mouth Disease. In any event this year’s programme did not include a visit to the UK and it is not clear when the next visit to Northern Ireland may take place.

6.7.9Classification is essentially a subjective judgement and there can be disputes from producers. Appeal arrangements allow producers to have a classification decision review by a senior member of LMC classification staff. The Minister is not aware of any evidence that the existing appeal mechanism is unsatisfactory. There would be additional costs if any other body were to take over the appeal function and there is no obvious body to whom that function could easily be passed.

6.7.10 DARD has no evidence to suggest that classifiers are being influenced by processing plant management.

6.7.11 DARD is aware that the classification system is being properly applied in GB, by virtue of the close relationship of DARD technical inspectorate and their GB colleagues. DARD has no specific knowledge of the application of standards in the Republic of Ireland other than that the EU inspects and is satisfied with classification standards there.

6.7.12 (In answer to a question about the LMC’s recommendation 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 – i.e. would the Minister support that line in negotiations with MAFF and the European Commission) “It will not be easy and they are looking at ways of achieving it. However, I would support that.” It should be noted that EU legislation links price reporting to the current classification grid and if any new pricing system were adopted commercially it would be necessary to ensure that the EU price reporting requirements could be met.

6.7.13 DARD is aware of developments towards objective mechanical methods of classification and supports the move towards the EU adopting such a system when it is proven that this is fully reliable. Developments are being closely monitored but the development of the necessary technology means that that is some way off.

6.7.14Classification 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.

6.7.15(Quotation from quinquennial review report) “Despite the criticisms levelled at the LMC in the provision of the classification service, all sectors acknowledged that LMC remain best placed to carry out the function at the present time.”

6.7.16 The question of who should pay the classification fee is entirely a commercial matter between those who provide and those who receive the service.

6.7.17 The problems may relate more to the pricing arrangements in Northern Ireland. The LMC has facilitated discussions between producers and processors on those issues. The Department has agreed to investigate the differentials in prices, at the Committee’s recommendation.

6.8.1 It is a requirement under European law that all beef carcases offered for trade must be classified in accordance with the European Classification Grid. It is a further requirement that the competent authority in each member state (DARD in Northern Ireland) puts in place measures to ensure that the standard set down in the regulation is properly applied.

6.8.2 There is no regulatory requirement for sheep carcases at this time. However, classification is operated in sheep slaughter plants to help in meeting customer requirements in terms of grades. In addition, sheep carcase classification is very useful to producers and producer groups and the LMC reports details to allow improved selection of breeding stock and to facilitate selection of best size, weight and finish of animals for the particular market.

6.8.3 The classification activity has always been separately accounted for within LMC finances.

6.8.4 The LMC responded to requests by producers and processors for an independent body to undertake this service. Its operation presents LMC and its staff with considerable difficulties; primarily sporadic abuse from a small number of producers and commentators who are unwilling to accept the validity of the LMC’s classifications. In addition, the LMC has difficulty with some meat plants who perceive LMC classifications to be more lenient towards producers than classifications applied in GB. The LMC has neither any right to the business, nor indeed any desire to continue to provide that service if a better solution can be found to meeting the European Regulation.

6.8.5 The LMC operates an appeals system whereby if a producer is in disagreement with the Classification Officer’s grade he can appeal to a Senior Officer to review the grade. The LMC maintains a full record of the appeals and notes a very strong correlation between the volume of appeals received and price movements in the marketplace. (When prices move downwards, the volume of appeals moves upwards.)

6.8.6 (From a bar–chart provided) there were between 25 and 85 appeals per month over a two year period. Example given: February 2001 there was a total of 68 appeals involving 478 carcases out of month’s total slaughterings of 37,281. Of the 478 carcases, 19 were upgraded (4 %).

6.8.7 It is worth noting that the increased prevalence of aitchbone hanging required for some customers eliminates the opportunity to appeal to a cold carcase. This occasionally causes frustration. The LMC can do no other than to try to assist with meeting customers’ needs.

6.8.8Technically, the appeals process is indeed available to meat processors but senior staff can recollect only a couple of instances of such appeals over the last few years.

6.8.9 (In answer to a question on making the appeals system more credible and user-friendly) The LMC would be happy to listen to alternative suggestions for an appeals process but does not see how it can achieve that.

6.8.10 It might be argued that because the appeal is carried out by LMC it is not fully independent. However, the senior officer is tasked with determining the correct grade only on the basis of the carcase and not on the basis of support for a subordinate. The appeals process adds significantly to cost of service provision. Any independent element would have to be separately funded. A Senior Officer is not always on site to conduct the appeal but this is not prejudicial since the definitive classification should be conducted on the cold carcase.

6.8.11 The big producers understand the grading process and generally agree that the grades are consistent and right.

6.8.12 (When asked whether LMC staff can operate without undue influence from processing plant management) the LMC has little record of complaints from Field Staff in this regard. To be fair to the plants, it is in fact unusual for them to complain to classification staff. Their natural inclination is to voice their complaints at corporate, rather than operational, level.

6.8.13 The LMC arranges periodic visits by Senior Classification staff to plants in GB and ROI. Visitors of similar standing from there are also received. It is both staff and visitors’ view that the classification service is operated to a very similar standard across the British Isles.

6.8.14 There is a comprehensive record available from DARD (as the competent authority) regarding the LMC’s performance as a service provider. This record highlights a small bias on the part of LMC towards the producer in regard to both fatness and conformation. This bias is deemed to be within acceptable limits. To the knowledge of the LMC, there has never been an EC inspection of the service in Northern Ireland where the EC experts have found the competent authority to be setting the standard other than in the producer’s favour. On the contrary, a proposal by the EC for intervention disallowance in regard to 1998 is still under debate as a consequence of the alleged over-leniency to the producer in the interpretation of the standard.

6.8.15 (In answer to a question about on-going training) there is an initial training programme for classification officers which LMC operates. There is then a licensing process where each officer is subject to scrutiny by DARD in the meat plants. Each officer subsequently is brought through with a review by LMC management. If it found that that they are drifting towards the boundaries set in the standard then on-going training and development will take place. There are between three and five Department staff employed with the sole purpose of monitoring the classification officers.

6.8.16 The boundaries mentioned above are 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. He is also 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 incorrect percentage is closer to the norm. The records show that, on both fatness and conformation, LMC officers are drifting in the direction of the producers by an average of about 10%.

6.8.17 The LMC would be in severe bother if the European Commission found that the LMC had an actual error level of 20%. It would not tolerate that. Our people are classifying within a margin of about 10% but it is LMC policy … that the producer be given the benefit of the doubt. When the European Commission team comes over, it does not want to do that. The LMC has evolved an understanding with the industry that on the boundary between two grades where judgement is difficult, the LMC officers give the benefit of doubt to the producer. This results in DARD deeming that LMC classifications favour producers by a grade increment in approximately 10% of cases. Such a benefit could not be officially sanctioned and its publicity is sensitive.

6.8.18 The extent of the latitude (20%) recognises that the ‘correct’ classification is an opinion of experts. The European Committee, consisting of 12 experts from a range of member states and the Commission, is the ultimate authority. On a visit, the Committee visits plants in Northern Ireland and each expert carries out a personal classification of a range of cold carcases in a chill. The Committee reviews the expert opinions (which vary from each other) and the correct grade is the consensus grade agreed by the Committee. It is against this background that a 20% deviation from the concensus is permitted by individual officers. Classification Officers can maintain their licences even if they disagree with up to 20% of carcase grades against the competent authority classification.

6.8.19 The LMC repeats its invitation to Committee members to visit meat plants to view the classification process and to discuss with senior officers any concerns which remain.

6.8.20 There is subjectivity on the boundary between grades which is inevitably subject to the frailty of human judgement. LMC would be strongly in favour of the adoption of mechanical classification arrangements if the technology was available. Regrettably, the conclusion of trials, held in the ROI on the three most advanced systems available, was that none of the equipment could accurately and reliably allocate a grade to meet the requirements of the European Regulation.

6.8.21 The equipment did seem to have merit in its capacity to accurately determine the yield of meat in a carcase. It seems to the LMC that the European Commission should be strongly urged to consider the adoption of modern technology and change its price reporting structure from that based on subjective grades to one based on meat yields objectively measured.

6.8.22 It could be argued that, in the grading system as it is structured now, that the price paid for cattle at the top end of the scale is too little … the price paid for cattle at the lower end of the scale … 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%.

6.8.23 (In response to a question about whether an animal which might get a high grade on a day where the overall quality was average could get a lower grade on a day where overall quality was high) “The circumstances described are not what we find in practice. The average does not change significantly from day-to-day and only moves very gradually upwards or downwards as quality changes with season, feeding or as a consequence of genetic developments.”

6.8.24 The LMC believes that within the boundaries of human judgement, every animal receives a fair grade from the service which the LMC provides. On average, the LMC is absolutely confident that Northern Ireland producers benefit from a professional service offered to the industry by LMC.

7.1.1 It would like to play a full part in the red-meat strategy group and the Farm Quality Assurance Scheme (FQAS) Standing Committee but their representations to do so have been rejected. The NBA’s members in Northern Ireland benefit from direct contact with the wider organisation at UK level – that may on occasions allow it to make valuable contributions springing from its wider UK perspective. The NBA is therefore unable to comment with any great authority on the LMC’s promotional activities. It does, however, acknowledge that the Red Meat Strategy was instigated before the NBA was formed in Northern Ireland.

7.1.2 The NBA supports the principle of the FQAS as a lever for re-entry into continental supermarkets when export restrictions are lifted.

7.1.3 The NBA would like to see LMC funds directed into the promotion of auction markets, which play a useful role in the industry, as an efficient assembly and distribution point for store cattle and with its price transparency at primestock sales.

7.1.4 Farmers are not good at marketing themselves – the priority is on getting the animals out of the way rather than marketing them.

7.1.5 The LMC has to be complimented on its work in schools, in order to combat anti-farming or anti-meat industry material which is being circulated.

7.1.6Promotion of exports, in the short term, should be met by processors until price-rises allow producers to contribute more.

7.1.7 The LMC did a good job on the promotion of beef to Europe before BSE. Farmers cannot do without the organisation.

7.1.8 NBA members feel that more work should be done to raise the value of their beef on the domestic retail and catering markets by properly identifying its regional origins and working on the sympathies and appreciation of Northern Irish consumers for home-produced Northern Ireland beef.

7.1.9 The NBA would counsel the LMC to recognise that ... greater mileage could be enjoyed if more beef was sold to catering outlets, particularly hotels, which were encouraged to sell it at a premium as a product of Northern Ireland – provided that the processing and cooking delivered the beef to the consumer in a condition that would not disappoint.

7.1.10 Beef is a product that can easily be damaged at any point of the production, processing, retailing and cooking chain so it is essential to establish an all-round strategy to ensure that improved incomes can be sustained on a cross-industry basis on the back of consistent delivery of a high quality product. The NBA would therefore suggest that the LMC pursue an integrated national system through a national brand with strict quality monitoring and strong disciplines.

7.2.1 Where the LMC has stated that the promotion of lamb at a German trade show proved successful the NSA would ask how they measured this success.

7.2.3 Lamb needs to be promoted better on the home market – for example it is rarely seen on hotel or restaurant menus.

7.2.4 The NSA asks whether or not joint promotions (on lamb) with the Republic of Ireland would be viable.

7.2.5 The NSA has not been asked to take an active part in LMC promotional activities. However, the NSA appreciates help given to the Ulster Lamb Groups in subsidising presence at food fairs and for the LMC’s role in the success of the lamb carcase competition at the NSA Lamb 2000 event.

7.2.6 More needs to be done to encourage marketing initiatives and the branding of lamb. If something similar to the ‘Greenfields’ brand could be done to promote Northern Irish lamb, this could be a success. Both the Scots and Welsh have lamb brands which are doing well. However, LMC would counter that they have not enough money to afford such a programme.

7.2.7 The MLC in Britain gives assistance to pedigree breeders and the NSA would recommend that LMC look at ways of helping Northern Ireland’s pedigree breeders. A representative with knowledge of the pedigree sheep industry could promote NI genetics alongside the MLC and others.

7.2.8 The LMC should examine costs and highlight returns required by the producer.

7.2.9 The LMC should look at innovation required in the industry and examine eating quality, health benefits of lamb and new ways of preparing and eating lamb.

7.2.10 While there is not enough money available for promotional work, the NSA sees the LMC’s production of the annual ‘glossy brochure’ as a bone of contention as it believes this must be very costly. The NSA believes that much of the content is ‘padding’.

7.2.11 Lambs going to the South are likely to end up in the same markets as those killed in plants in Northern Ireland. This could be said to reflect on the promotion of Northern Ireland lamb.

7.3.1 The LMC performed their marketing function well throughout Europe prior to the onset of the BSE crisis. However, since then, with the re-concentration of beef sales on the GB market producers are disillusioned at the LMC’s performance in promoting the quality, diversity and saleability of locally produced beef on the home market. The UFU recommends much more emphasis in this area until export restrictions are relaxed.

7.3.2 Whether we like it or not, we must work with the supermarkets. The LMC has made a reasonable job of securing contracts with United Kingdom supermarkets that were not there prior to BSE.

7.3.3 Not enough resources are deployed by LMC in the promotion and marketing of the diversity of Northern Irish lamb and lamb products. Much more work on the promotion of lamb is considered essential. The UFU acknowledges that with income from lamb slaughterings only about £40,000 per year, there is little funding available for lamb promotion. However, the Union cannot support any increase in the levy generated on lamb slaughterings.

7.3.4 More clarity is required in the LMC’s relationship with the MLC in Great Britain. However, the UFU considers that the relationship has helped facilitate the tremendous growth of Northern Ireland beef in the British market.

7.3.5Promotion must include the processor and the producer. If the processor does not have a market the producer has no market. If there is a market, then processors are needed to process the product.

7.3.6 The MLC’s levy per animal is about £4 per head, roughly four times that paid in Northern Ireland. The marketing budget is obviously greater.

7.3.7Measurements of benefits arising out of promotional activities would be difficult to quantify. Any promotional work that enhances the image and sales of Northern Ireland beef and lamb is likely to benefit all parties concerned.

7.3.8Globalisation is the biggest threat to Northern Ireland’s beef and lamb producers. It will be imperative for bodies such as the LMC to continue to seek out niche markets for foods produced locally and to promote the very considerable advantages that Northern Ireland produce has to offer over the global commodity players.

7.4.1 NIAPA believes that it exerts influence on LMC promotional activities through presence of members on the Board, and on various committees.

7.4.2Promotions need to be sustained at point of sale and education and schools work should continue. There needs to be a balance between short term output and the longer time frame promotions aimed at the younger generation.

7.4.3 NIAPA believes that the LMC’s use of the MLC’s expertise and documentation provides value for money.

7.4.4Historically, NIAPA believes, the processor appears to be the largest benefactor of promotional activities and can benefit quickly, compared to the farmer, whose long lead-in times do not allow the versatility of management decision making enjoyed by processors. Promotional activity could be managed more closely by farmer representatives on the Board to ensure that benefits included a long-term return for the farmer.

7.4.5 Branding is essential. The ‘Greenfields’ brand was a success and that success might be emulated once more. However, competitors have not stood still. We must take the farming industry forward, especially the 25-50% that is willing to adapt, and ensure an appropriate market return for birth-to-slaughter farm assurance.

7.5.1 The organisation has neither involvement nor feedback with regard to promotional activities conducted by the LMC.

7.5.2 NIAPA Ruling Council members would be of the opinion that any direct benefit to producers by way of marketing promotion is at best insignificant if at all measurable.

7.5.3 NIAPA Council members are not impressed by the performance of the LMC by any standards, and compare badly to their counterparts in the UK where equivalent prices are known to be 22p per Kg above the Northern Ireland price.

7.6.1. If the NI beef and sheep industry is to give the highest returns to producers it is absolutely essential that there is a promotion agency doing the generic marketing function. Promotional activity is seen as one of the LMC’s strongest points and they (and only they) are best equipped to do the work.

7.6.2.Promotion is an area that needs to be seen by the public to be divorced from the agricultural and agency sides of LMC’s activities, yet professionally co-ordinated under the Board’s management.

7.6.3 LMC should have the over-arching control of all promotions within the meat and lamb sectors, including areas that are currently carried out by DARD, LEDU and the IDB.

7.6.4 Some district councils and rural development authorities have also been involved in promotions. On occasions, this has embarrassed some of NIMEA’s premium customers.

7.6.5 The LMC should collate available data to harness knowledge gained through the Farm Quality Assurance Scheme and make realistic forecasts on the availability of quality raw material. Currently, nobody can tell either the number of quality cattle or sheep available for any given time ahead. Armed with that information, the processing sector can perform a marketing function directly related to production, thus being more efficient and adding value back down the chain.

7.6.6 To date, all promotion of Northern Irish beef and lamb products has been run by individual processor investment in conjunction with the LMC.

7.6.7 It is unfair to say that the LMC has made no contribution to European markets or to the value that the producer was getting for his beef in Northern Ireland pre-1996. Prior to that year, Northern Irish prices were probably the highest or second highest in Europe.

7.6.8 The strategic alliance with the MLC ensures that we keep a British label on our meat in Northern Ireland. You only have to look at the price differentials between NI and the ROI 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 NI that traditionally went to the European market.

7.6.9 The LMC is currently working on identifying particular niche markets around the world because we are a very high cost producer of red meat. It has held onto the ‘Greenfields’ brand to ensure that there will still be a premium place for Northern Irish meat in that market. The LMC is identifying other markets. When those are open, the LMC will launch an attack with its (hopefully) increased funding and that should work its way down the chain.

7.6.10 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.

7.6.11 The LMC provides value for money. That judgement is based on the customer’s opinion of the independence, integrity and the foresight of the LMC. 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.

7.6.12 (In response to a question about encouraging retailers to subscribe to promotional activities for Northern Ireland meat products) the fact that you ask this question displays the fact that you do not even have a basic understanding of the trading contract relationship between a supplier and a retailer. It costs to get space on a retailer shelf, they are not queuing up for our business. There is nothing to stop either the LMC or political approaches to retailers, but nothing should be done that would prove divisive to the current retailer relations with NI meat and lamb suppliers.

7.6.13 Market research shows a swift increasing percentage of the younger generation becoming pro-vegetarian. The Vegetarian Society claims that 12% of young people are vegetarian and that there are 4 million vegetarians in the UK, representing 7% of the adult population. It is therefore absolutely essential that a strong educational programme be pursued to accurately display both the health and nutritional values of beef and lamb and to encourage it as a regular ingredient in meals. Processors are aware of the importance of this activity and have supplied meat for schools educational programmes at discounted rates to supplement this. The educational seminars conducted by the LMC for the higher education teachers across NI have been an excellent promotional activity for beef and lamb and have resulted in a much higher awareness of the value of a balanced, healthy diet within the community.

7.6.14 The market place is ever changing and LMC must be pro-active in discerning where to focus its attention. That activity must be left to the marketing experts on the LMC Board and within the LMC ranks. This activity should not be shackled by government or anyone else, in dictating what should be priority for market research.

7.6.15 It must be stated categorically that the main beneficiary of beef and lamb promotion is the primary producer. If we do not continue to promote, then the return will be even lower. 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. There is a rhetoric and misconception around that the world is queuing up to buy NI beef and lamb. They enjoy their current market position due simply to both the generic promotion by LMC and the product promotion and supplier services marketed by individual companies.

7.6.16 The simple means of demonstrating the value of generic promotion of NI beef and lamb is to stop all promotional activity and then watch our market outlets being taken over by others and producer prices spiral down further and further.

7.6.17 It may be that the real return of increased levy will simply be that we retain the market share we have fought for and secured to date.

7.7.1 DARD’s overall responsibility for the LMC’s promotional and other activities is exercised in a number of ways. The LMC draws up a 3 year Strategy Plan which is agreed by DARD. Where public funds have been provided to support marketing or promotional activities the LMC will have submitted specific proposals. A condition of approval will normally be that a report is provided on the extent to which the programme has successfully met the set objectives.

7.7.2Evaluation reports of marketing promotional activities are sought by DARD and the information available does indicate that the activities are cost effective and represent value for money. The report on the LMC’s promotional activities in 2000 part-funded by the EU Quality Beef Promotion Scheme indicated that consumption of beef in Northern Ireland increased by 6.5% over the period of the programme and that, in terms of awareness, a significantly high number of people have been reached by the campaign. In addition an independent evaluation of expenditure in 1997 concluded that the LMC promotional activity was properly targeted and represented value for money.

7.7.3Evaluation of promotional activities, undertaken on behalf of the industry as a whole, would not distinguish between the benefits to the different parts of the supply chain. It is doubtful whether such benefit could be separately identified. In any event the processors’ levy contribution means that they are contributing to LMC promotional activities.

7.7.4 The Minister suspects that retailers will be reluctant to contribute to LMC promotional activities even though they may benefit indirectly from them.

7.7.5Consideration is being given to action that might be necessary to help the agri-food sector, in particular the livestock sector, to recover from the impact of Foot and Mouth Disease. At this stage it is not possible to say whether the marketing of meat products (or any individual proposal) may be allocated additional funds.

7.7.6 The Minister believes that the LMC should continue with its policy of being fully open and transparent in all its activities thereby demonstrating to producers the full range and impact of its services. The Minister welcomes the fact that ... the LMC has initiated a series of meetings with producers throughout the Province. It is by making the industry more aware of its services and activities, and by identifying and responding to the needs of industry and engaging in constructive dialogue, that the LMC can build on what has been achieved to date.

7.8.1 It is important to highlight two guiding principles under which the LMC feels it is appropriate to operate:

· Strategically the LMC must recognise that NI is not a low-cost producer of red meat, and, as a consequence, the LMC has concluded that we must seek to position the industry to supply the maximum possible percentage of our production into the highest value premium markets accessible to us.

· We must recognise that LMC can only function at a generic level and that all of the promotional work which it does needs to be complementary to the specific activities of both processors and retailers who are essential participants in the chain of distribution.

7.8.2 (In response to a question on value for money) it is generally a requirement that an independent assessment is carried out on the effectiveness of individual programmes. (On evaluation of the red meat strategy) it will be for the appointed independent (evaluator) to decide how best the assessment is carried out. (It will) consider the strategy, the programme of activity carried out and the achievements of objectives. Assessments are normally completed within 6 months of the programme’s completion.

7.8.3 The LMC divides its promotional and marketing activities into three geographical areas: Northern Ireland, Great Britain and International.

7.8.4 In essence the LMC since 1996 has assumed the role of ‘brand guardian’ for Northern Ireland beef and lamb. The LMC has vitally important messages in regard to the nutritional attributes, provenance and health benefits of red meat. The LMC has concluded the necessity to portray the benefits and attractions of red meat to a younger generation; the majority of activities in Northern Ireland are within the education sector. The LMC has succeeded in developing a very productive working relationship with the schools, both meal-providers and the teaching side. Annual expenditure in NI is approximately £400,000 of which two thirds is spent in education.

7.8.5 Within the GB market, the best returns are available from the premium multiple retailers. The NI processing industry has made substantial progress in building business with these premium retailers. It is critically important that we have the capacity to brand our product as “British Meat” the brand attached to the vast majority of beef and lamb sold by these retailers. In order to secure full and proper qualification for the attachment of this brand to NI meat, LMC has entered into a two-year agreement with the MLC, whereby we make a significant contribution to the promotional budget of MLC for beef and lamb. Expenditure for years 2000 and 2001 is £450,000 per annum. MLC invests in the order of £8m per annum in consumer marketing the brand for several years.

7.8.6 The MLC’s campaigns in GB are highly effective, as this is the only market in Europe since 1995 that has achieved growth in beef consumption (5%). The benefit to our industry can be seen from the premium of 9p/Kg or £27 per beast for NI cattle over Republic of Ireland cattle. This is equivalent to a benefit to NI beef producers of over £10m per annum. The British Meat brand is not used to any significant degree (in Northern Ireland). Our interest is in securing the market share we currently enjoy in GB. Our best customers have no interest in confining themselves to sourcing beef or lamb in one region only. Northern Ireland could not supply the full beef requirements of even one of the top four GB retailers.

7.8.7 Exports historically accounted for approximately 50% of NI production. LMC believes it is vital that we remain active in sustaining contacts in export markets, keeping abreast of customer developments and looking for new opportunities. Activities include: market research - building a ‘world map’ of the red meat industry; international trade fairs – supporting red meat industry participation at major international food fairs e.g. SIAL and ANUGA; development of the ‘Greenfields’ brand; and brand research. Budget of £425,000 for the current financial year – reducing to £300,000 per annum thereafter. A lot of this relates to the Red Meat Strategy – as that comes to an end it will reduce the amount that the LMC will spend.

7.8.8 The LMC would highlight the value of ‘Greenfields’ brand in the Netherlands: in January 2001 Dutch cattle at farm-gate level were £1.09/Kg where ROI cattle for Greenfields were £1.50/Kg. (In response to a question about whether NI cattle producers will benefit in the longer term from the re-launch of the brand) – yes, otherwise the LMC would no longer invest in the brand.

7.8.9 The role of the LMC (in relation to exports) is to attract the customers that Northern Ireland used to have and to keep constant contact with them to ensure that when markets are re-opened to us we have still got the good relationship and product to provide to those customers. The LMC should add that a significant proportion of lamb processed in Northern Ireland is exported.

7.8.10 No assessment of the balance of benefits from LMC’s promotional activities (between producers, processors and retailers) has been carried out. The LMC does not believe that it is possible to make a definitive determination in regard to such a balance. In dealing with multiple retailers, it must be understood that NI processors already make a significant contribution to promotional campaigns by their customers. In addition, retailers will argue that at point of sale and promotion and advertising in in-house magazines, they already make by far the largest contribution towards promotion of beef and lamb.

7.8.11 The LMC thinks it is unlikely that retailers will willingly contribute (to the LMC’s activities) even though they do inevitably benefit. Where professional organisations equivalent to LMC exist throughout the world the LMC is aware of no example of core funding coming from retailers. However, LMC … have found retailers willing to participate to new bodies or schemes and to offer advice using their knowledge of the market. The LMC would cite Tesco’s collaboration with it in the promotion of Northern Ireland Aberdeen Angus beef in January as being a particularly good example.

7.8.12Retailers, and to an extent processors, have the right to source their raw material as they choose. It can therefore be argued that the only beneficiary from LMC’s promotional activity is in fact the producer. For example, NI producer prices have held remarkably well following the recent BSE crisis across European markets due to the quality of markets being served. Commodity beef is freely available in the UK market at a producer equivalent price of under £1.20/Kg. Throughout this period NI beef has sustained an average producer price of almost £1.60/Kg.

7.8.13 In conclusion, the LMC is convinced that the marketing and promotional work of LMC adds significant value to our red-meat industry. The independent evaluations of individual elements of LMC activities support this view.

7.8.14 (From independent evaluation (carried out by CAPITA) on LMC promotional campaign conducted under the European Quality Beef Promotion Scheme):

· Overall the campaign’s objectives to increase the awareness of, and demand for, Quality Beef was achieved. Overall consumption of beef in Northern Ireland increased by 6.5% over the contract period reviewed.

· … to conclude, the Livestock and Meat Commission have carefully developed an astute marketing and promotional strategy based on market intelligence and research. The success of this strategy is reflected in the positive feedback gathered through this evaluation and the high numbers of people directly and indirectly reached through the campaign.

· It is our general recommendation that some type of evaluation is carried out for events that LMC attends. A more in-depth evaluation of the CD-Rom ‘On the Farm’ should be conducted.

8.1.1 The NBA would view the current composition of the Board as the most visible example of its fundamental weakness. Of the two current ‘producers’, neither could be described as a typical full-time farmer. Even if they were, the NBA considers that this would remain a disproportionately low representation against that enjoyed by other sectors. This underpins the accusation that the LMC leans too far towards the meat trade.

8.1.2 The most urgent challenge facing the LMC is to address the producer perception that it is “too cosy” with NIMEA, either by demonstrating that it is not true, or by taking steps to correct any leanings in that direction identified through self-examination. The LMC should re-arrange and expand its Board to ensure fuller farmer representation (through places for four full time farmers out of nine members) and farmers’ influence should reflect the weight of the producer sector. The NBA believes this would result in less routine criticism from producers and the adoption of policies which are in tune with grass roots aspirations. Full time farmers could force change and there are many who could do so.

8.1.3 The Board membership should change completely after either one or two years and there should be no salary paid for the job, only expenses. This would ensure that only those with a real interest in the industry would apply and that members would not be seen or consider themselves as employees of the LMC. They could then become genuinely independent representatives of their sector. The NBA dismisses the idea that, without financial encouragement, the LMC would not be able to attract individuals of sufficient calibre.

8.2.1 The NSA is not involved in the selection of the Board members or given any notice of vacancies. None of the NSA’s members saw the last advertisement. The advertisements are usually in the Belfast Telegraph. There would be a much higher chance of farmers applying for it if an advertisement was placed in ‘Farming Life’ or ‘Farm Week’. The first time farmers are aware of an appointment is after it is made.

8.2.2 The NSA would welcome the opportunity to advise on selection of a Board member or to propose a candidate. There is a lack of transparency in the present selection process.

8.2.3 The NSA is not satisfied with the composition of the Board, bearing in mind that the LMC is producer-funded. There are no complaints about specific members but the overall make up shows a bias towards the processing industry.

8.2.4 It may also be worthwhile securing the services of someone from a similar but non red-meat sector (e.g. Moy Park) with expertise in meat production and meat exports but a less direct influence on red-meat processing.

8.2.5 If farm producers are funding the LMC then they ought to have a say in it. There are no full-time farmers, depending on farming as their only income, on the body. The NSA would also like to see a sheep producer on the Commission.

8.2.6 The NSA acknowledges that beef is a much bigger industry but believes that the sheep industry should not be neglected – there being no option in hill farming other than sheep. The LMC should consider introducing a specialist sheep sub-committee to deal with sheep and lamb issues. The NSA feels that the industry would support such a move, provided that it ‘produced the goods’.

8.3.1 There must be more representation of producers on the LMC – it is heavily weighted ‘the other way’. There should be three livestock producers on the Board, two of whom should be nominated by the UFU. This would alleviate producers’ concerns and lead to greater accountability. The UFU would be content with eight or nine members, no more.

8.3.2 The UFU recognises that farmers are poor promoters and that there must be outside expertise on the LMC Board. There is a need for people who know the market and, possibly, some who know the political field because marketing of foodstuffs involves politics.

8.3.3 With a portfolio ranging from promotional and marketing activities to provision of carcase classification services it is vital that sufficient representation of producers at board level is accommodated to give proper ground level accountability on the direction of LMC activities.

8.3.4 In the past, the UFU has undertaken to nominate producers to serve on the Board of the LMC. Current appointments are made by the Minister following rigorous procedures. However, if the current Board structure were to change, the UFU would prefer to be able to nominate suitably qualified candidates for the producer participants who could readily input the views of beef and sheep producers on the ground.

8.4.1 There is a good mix on the current Board but an increase to nine members would be preferred, with a minimum of four farmers directly involved in the agricultural industry.

8.4.2Appointments (including those to allow expansion) should be according to the Nolan principles and appointees should have personal skills, expertise, experience and knowledge to allow them to take an industry, rather than a sectoral view. NIAPA does not believe that specific groups or associations should have sole powers to nominate.

8.4.3 NIAPA has never been involved in the appointments process but believes it was changed for the better and will be glad to comment on the process.

8.5.1 The organisation would not be satisfied that present representation on the LMC Board is either balanced or adequate in terms of producer need.

8.5.2 The organisation would not see a cost benefit to producers in expanding the number of Board members.

8.6.1 The current Board of LMC is much more relative, capable and focused on their task than may have been the case in the past and being much more attuned to the activities of a fast-changing meat industry, have enhanced their standing considerably. The future of the Board needs to be made up of strong, senior experienced meat industry personnel. The LMC must rise to a level of its competitors, i.e. An Bord Bia and MLC.

8.6.2 Because of the development of the industry in Northern Ireland over the past 15 years NIMEA believes that the Board should be increased from 7 to 9. The Board should consist of those who can demonstrate marketing vision and contribute to the marketing potential of the beef and sheep industry of Northern Ireland.

8.6.3 There should be three reps from the processing sector, two farming reps, one retail butcher rep, one other meat sector related person and one food industry-related independent Chairman. There should also be one person from the Food Service sector, e.g. a retired manger from one of the major multiples.

8.6.4 The various sectors should have input into the appointments and should be made by Ministers from nominations, exempt from the Nolan principles. NIMEA sees these principles as contributing to mediocrity, in that anyone can apply. NIMEA believes that Board members should be captains of industry who understand the international marketing arena. However, they do not apply for those sorts of positions – those who are likely to apply are people who do not have the skills that are required. We do not want to end up with a Board of mediocre people – the Nolan principles are prejudicial to the real top professional people that we need on the Board.

8.6.5 With the greatest of respect to the farming sector, they are not the best people to be involved in marketing. Look what has happened to the farmer-controlled marketing boards of the past. The generic promotion must be done on behalf of the entire industry by a professional team under the direction of a professional Board that understands the market place.

8.6.6 If the LMC is to become a farmer-dominated body then there is a real fear for the future vision of the beef and sheep industry. Discrimination in favour of either producer or processor will cause imbalance and lack of co-ordinated determination. The focus must be removed from “perceived sector representation” to a Northern Ireland industry marketing perspective for the benefit of “NI Beef and Lamb plc.”

8.6.7 DARD has informed NIMEA when vacancies on the LMC Board are being advertised in the press and in return NIMEA has encouraged potential candidates to apply for appointment.

8.6.8 The LMC should adapt to represent the industry needs of the 21st century. It should continue to be managed under a Board of appointed Commissioners. The day-to-day running should be under a Chief Executive with two Deputy Directors, one for agricultural services and one for processing and promotion services. This would give some perception to the “separateness” of functions co-ordinated under the Board.

8.6.9 The Chairman of NIMEA also sits on the Board of the LMC. That is not a conflict of interests. We can make decisions without having to 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. This is seen as an advantage, not a conflict. Other members of NIMEA are former members of the LMC Board. The intimacy of that relationship is a strength, not a weakness.

8.7.1Appointments to the LMC are carried out in accordance with the Nolan procedures. These have been reviewed by auditors appointed by the Office of the Commissioner for Public Appointments on two occasions and found to be in compliance.

8.7.2 Officials discuss, with the LMC Chairperson, the nature of the skills required in any particular appointment before the procedures begin.

8.7.3 In the most recent appointments process the Department identified a field of candidates through public advertisement in the main Belfast newspapers, by writing to industry organisations with an interest in the activities of the LMC and by drawing on the list of available people held by the Central Appointments Unit. Candidates were assessed on merit by means of a panel which included independent representation. The independent assessor is chosen, having regard to the central list of people who have been identified as being willing and suitable to serve in such a capacity and Departmental knowledge of other suitable persons.

8.7.4 It is through ensuring that vacancies are widely notified through advertisement and writing to organisations that DARD ensures there is no discrimination in making all groups aware of the process of appointment. All advertisements carry a statement that appointments are based on the merit principle and on equality of opportunity. Where appropriate, specific encouragement will be inserted in advertisements to bring forward applications from under-represented groups.

8.7.5 Re-appointments have also been considered in accordance with the Nolan procedures. In particular, the Department seeks an assessment by the Chairman of the performance of each member, covering issues such as attendance, involvement in Commission activities beyond Board meetings and the performance of the individual in terms of the contribution made to the overall work of the Commission.

8.7.6 (In answer to a question on whether the Minister would allow sector bodies to nominate members to the LMC rather than be appointed by the Minister) “The legislation requires that I make appointments. A change in the legislation would be required to do that and we would have to be careful that nominations would be in accordance with the Nolan procedures. I am not sure that would be the case if we insisted on sectoral appointments.”

8.7.7 (In answer to a question about there being no women on the LMC Board) “I assure (the member) that that has not gone unnoticed by me and I am very anxious to address that issue as soon as possible within the Nolan guidelines. It is important that we have a gender balance on Committees, otherwise we will not reflect society.”

8.7.8 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 (quinquennial review) report contains a proposition to increase membership to nine. Consumers are not represented, which they would complain about; the technology end of the industry could also possibly be represented.

8.7.9 (In answer to a question about how additional seats would be allocated) “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.”

8.7.10 If membership of the LMC is increased there will be consultation with the Commission and relevant industry organisations on the additional skills or background that may be necessary to ensure a fully effective Commission.

8.7.11 While the possibility of linking payments to attendance will be considered the Minister will want to be satisfied that in so doing there would be no adverse implications in terms of the ability to attract a range of candidates of sufficient calibre. Payment by attendance may not be entirely fair unless there is some mechanism for taking account of time spent on LMC activities outside of formal meetings.

8.8.1Appointments to the Board of LMC are entirely the prerogative of the Minister. It is the LMC’s understanding that the level of consultation on appointments with either the Chief Executive or the Chairman of LMC has varied considerably over the years.

8.8.2 It is the view of the current Board that Commission members should have the following qualities:

· Skills, knowledge and experience of the industry at either producer, processor, distributor, retailer or consumer level, or professional expertise in a discipline that is relevant to the activities of LMC.

· Be of independent standing, capable of rising above sectoral interests and taking a view which is for the greater industry good.

· Be of independent means and not substantially reliant on their Commission fees as a significant part of their income. Commission members should operate across all of their business interests to the highest ethical standards and be open and transparent in regard to any possible conflicts of interest which might arise.

· Be able to demonstrate a continuing enthusiasm, interest and support for the red meat industry, should be available and prepared to attend the vast majority of Commission meetings and should be prepared to fully engage and contribute their skills, knowledge and experience to the benefit of policy formulation at the LMC Board table.

8.8.3 While these are the qualities which the Commission has defined, the LMC believes that the approach by the Department is in reasonable accord with its views.

8.8.4 In addition to the above it is critically important that the three major interest areas across the industry are represented on the Board: Producers, Processors and Retailers/Consumers. It is noted that considerable damage was done to the LMC’s standing when a previous Minister made appointments to the LMC which failed to recognise the importance of having skills, knowledge and experience at producer level at the Board table. The current Board, the LMC believes, demonstrates a more appropriate mix. (The Chairman is) convinced that the LMC now has the strongest Commission since he was appointed.

8.8.5 If (the Board is extended from seven to nine) it would allow farmers’ interests to be further represented by at least one additional player. That would go some way towards allaying the industry’s perception that it is under-represented.

8.8.6. LMC is generally supportive of the proposal to increase the Commission membership to nine. It would help ensure that all of the interest areas were covered. The LMC is a larger business than its 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.

8.8.7 (In answer to a question about the appointment of women to the Board) (the Chairman) would be delighted if the LMC had excellent women on the Board. (He) would be singularly disappointed if (on an increase to nine) there were not more female members.

8.8.8 (In answer to a question about whether the LMC would object to sectional interests having the right to nominate to the Board) that might take away from the independence of the Commission – (it should be) the subject of a consultation process. (There is) no necessity for it.

9.1 The Committee undertook, in its agreed Terms of Reference for this Inquiry, to take account of the results of the five-year review of the LMC. However, it was apparent that the review, although completed early in 2000, when the Assembly was in suspension, had never been finalised or published. It was also reported to the Committee that the Ulster Farmers’ Union had received no feedback from DARD on its submission following the preliminary report.

9.2 Both the UFU and NIMEA expressed concerns about the review – the former that reviews do not take place every five years and the latter that the results were not published. The LMC also reported that Commission members had repeatedly expressed their disappointment that the report had not yet been published.

9.3 It is clear to the Committee from the evidence that there is a real interest, particularly from producer/levy-payers, in how the LMC is performing. It is essential that the sponsoring Department’s reviews are carried out thoroughly, and in a timely fashion. It is even more important that the results of these reviews are widely publicised to stakeholders. Delays in publication of the review report, as have been seen in this review, must be avoided in future.

9.4 It is therefore the Committee’s recommendation that DARD’s next quinquennial review takes place in 2004 and is completed within three months. The Committee further recommends that industry and other responses to any draft or preliminary report on the review are both acknowledged and given a substantive reply by the Department and that the final report is circulated widely. This circulation could be enhanced through provision of an Executive Summary as a press release or articles in farming and other industry press, and through use of the Department’s and LMC’s web-sites.

10.1 The Committee was sympathetic to the evidence from producer organisations that farmers perceived the LMC to be controlled by the meat plants, too cosy with NIMEA, or to be more aligned to the needs and objectives of the processing industry. This would be entirely consistent with views expressed to members by their constituents. The Committee is broadly of the view that this results in consumers not deriving the benefit of reduced prices to the farmer.

10.2 There was, of course, the counter-argument, expounded by both NIMEA and the Department, that the LMC’s strengths included its independence and its broad representation at Commission level. The Committee heard this argument, but was not convinced.

10.3 The Committee also noted with interest that the UFU believes that no other body in Northern Ireland could satisfactorily adopt any of the roles performed by the LMC. NIAPA also acknowledged that the LMC provided services essential to the industry’s ability to perform. This broad support, in general terms, was also reflected in DARD’s quinquennial review.

10.4 The Committee considers that the LMC’s perceived independence is of such importance (in all aspects of its work) that the Commission must take whatever steps are necessary to counter the negative perceptions. A positive perception is crucial to enable the LMC to fully serve all its stakeholders.

10.5 Some of the producers’ concerns result from perceptions about the loyalties and affiliations of current Commission members. This aspect will be further explored later in this Report, when the system of appointments to the LMC is being discussed.

10.6 It is acknowledged by the Committee that the LMC and its staff will have to work closely with meat processors, particularly in relation to promotion and in trying to maintain existing markets and to access new ones. However, these relationships must be transparent regarding their necessity, conducted in a completely professional manner and demonstrate the independence of one ‘side’ from the other. From the evidence heard, producers do not believe that this is currently the case.

10.7 The Committee therefore recommends that the LMC develops and publishes a concise ‘protocol’ in which the purpose, level and frequency of LMC contact with the meat processing industry is defined. Contacts should be monitored and the protocol reviewed in light of actual events, with a clear position report published at least once a year.

11.1 Many of those giving evidence from the producer side also referred to communication as an issue. The National Beef Association acknowledged that the LMC would find it easier to communicate with small groups of processors than with a highly fragmented body of farmers. There are clear links here to recommendations made by the Committee in its earlier Report “Restoring Profit for the Beef Producer”[40] regarding the need for a production-orientated Task Force. The Committee would re-iterate the need to transform this fragmentation into a market-orientated, organised production force, with which the LMC could communicate more easily.

11.2 The NBA advocates that the LMC Board should hold more direct and regular consultations in open forums, and that the example set by the Food Standards Agency be adopted. The National Sheep Association believes that the LMC is not good at communicating with farmers and recommends regular meetings with the sheep industry representative bodies.

11.3 The Committee also notes that the LMC has initiated a series of producer meetings and that the Minister has welcomed this. It appears to the Committee that such meetings, if properly structured, inclusive and frequent, may have a two-fold effect. Firstly, producers would feel more inclined to ‘ownership’ of the LMC through greater understanding of the services it provides. Secondly, the LMC would gain a closer understanding of the needs and expectations of producers and be able to respond to these. It must surely be one of the prime objectives for the LMC to be accountable to those whose funds enable it to exist.

11.4 The Committee therefore recommends that the LMC embarks on a series of structured producer meetings, in consultation with farmers’ representative organisations (both at general and sectoral level). In order to reduce costs, the Committee recommends that DARD facilitates these meetings in its accommodation throughout Northern Ireland. Producers must also play their part through participation and a willingness to learn about the LMC’s activities and to pass on this information to fellow producers.

11.5 The Committee also considers that there is much merit in the proposal to develop an agricultural forum, in order to structure the relationship between the LMC, NIMEA, producers, consumers and all interested parties. The Committee therefore recommends that DARD facilitates discussions among the interested parties regarding the development of such a forum.

11.6 In terms of producer representation, the Committee acknowledges that the relationship between the LMC and the National Beef Association is an uneasy one. However, the Committee also accepts the NBA’s view that its links with a wider UK organisation, and its members’ different perspective from the main farmers’ representative organisations, make its views valid and worthy of consultation.

11.7 The Committee therefore recommends that the LMC takes urgent and clearly defined steps to improve its relationship with the National Beef Association and to include their views in discussions on the Red Meat Strategyand the Farm Quality Assurance Scheme. The LMC should also formalise and improve its relationships with the National Sheep Association to ensure the widest perspective in sheep and lamb-related matters.

11.8 It was also interesting for the Committee to note one organisation’s view of the LMC’s Annual Report. The glossy brochure was considered expensive and much of the content “padding”. The Committee understands that, as an Executive non-Departmental Public Body, there are certain requirements of the LMC in terms of its Annual Report and Accounts. These demands must be met. However, the Committee believes that the views expressed about the Annual Report offer a warning to the LMC that it must not rely on this Report as its main method of communication of its activities and objectives to the producer sector.

11.9 The Committee recommends that more use is made of the LMC Bulletin and articles in the farming press to provide immediate and specific updates of the LMC’s activities. In this way, the Committee believes that farmers would consider themselves to be more involved and better informed. Opportunities also exist to link IT training for farmers (and their families) to IT-accessible information from the LMC. The Committee recommends that these are explored in conjunction with DARD.

12.1 The Committee concurs with DARD’s view that it is appropriate for the LMC’s core funding to come from the industry rather than from government – always assuming that benefits to the industry are a clear outcome of the LMC’s activities. It would appear to the Committee that levies are the simplest method through which such core funding can be obtained, and that similar arrangements exist in other meat-producing countries.

12.2 There is also very clear and widespread acknowledgement throughout the evidence that the current funding of the LMC is inadequate. Much was made, by some of those giving evidence, of the disparity in levies payable by producers in Northern Ireland compared to those charged to their counterparts in Great Britain.

12.3 For example, NIMEA believes that the levy on cattle should be nearer £3 than the current charge of 80p. DARD suggests that the clear differences between NI and GB demonstrate that there is scope for levy income to be increased. From the producer perspective, there is, perhaps surprisingly, an acknowledgement that an increase in levy may be necessary. However, there is also unanimity in the view that no increase would be sustainable in the current economic climate in which farmers operate.

12.4 There are also differing views on whether an annual review of levies should be undertaken. NIMEA believes such a review would be beneficial in that it would allow the LMC to take account of competitive factors in other countries. DARD also advocates an annual review and reports that it is currently in the process of amending legislation to increase maximum levy rates and to introduce a processor levy. The UFU, despite their position that any increase to levies would be unacceptable, advocates annual reviews to take account of the increasingly challenging market places. NIAPA considers that three-year reviews would be more beneficial to allow a balanced analysis of environmental and economic factors. The National Beef Association takes what may be described as a pragmatic view, that annual reviews would cause regular difficulties and undermine the relationship between the LMC and a principal source of its funding. The NBA advocates annual rises, to coincide with inflation, that could be applied without review.

12.5 The Committee accepts that there are disparities between NI and GB in the levies charged. Funds available to the LMC are, as a consequence, lower in relative terms, to those available to the Meat and Livestock Commission. However, members believe that parity of charges would only be justifiable in the context of parity of prices to producers being achieved. That is, of course, far from the current position. If, for example, farmers received £60 to £70 more for each animal slaughtered (and actual figures seen previously be the Committee have demonstrated that such differences are the norm), then the increase in fee of £2.20 would conceivably be acceptable to them.

12.6Furthermore, it is the Committee’s stated position that, given the current crisis in farming income, there should be no immediate increases in fees or levies paid by farmers.

12.7 The Committee therefore recommends that DARD proceed with the necessary legislative changes to allow for future increased levy rates but that the LMC increases the current rate only in line with inflation from 2002/03. This increase could then be made annually and would be anticipated by producers. If, and only if, parity of prices with GB is obtained, the LMC should propose an increase in levy to achieve parity with levy charges in GB. If the current price differential reduces and remains stable, there may be an argument for some increase towards GB levels, proportionate to that reduction in differential.

13.1 In considering the principle of a producer levy, producer organisations were broadly supportive and welcoming of it. Producers consider that processors have benefited from LMC activities since the organisation’s inception and that they clearly benefit now.

13.2 The Committee was not impressed with the attitude demonstrated by the NI Meat Exporters’ Association, who complained that the Committee’s comment that farmers were “paying for the Commission” was “hurtful”. The Committee accepts that NIMEA members are now paying a voluntary levy. However, this only began in the year 2000, the LMC having been funded by producers for very many years before that. The Committee agrees with the LMC’s assertion that all of the major processors have sought and gained assistance from the LMC in dealing with particular markets or customers.

13.3 Far from being some altruistic concession on behalf of the meat processors, the Committee considers that the new levy should be seen as the processors merely ‘paying their dues’ for extremely fruitful work carried out in local, national and export markets. NIMEA themselves also acknowledge that the introduction of a processor levy on a statutory basis will simply be in line with GB and ROI.

13.4Furthermore, the Committee takes exception to NIMEA’s comments that the producer is always the beneficiary of positive promotional activity, no matter who pays, and that farmers are the largest and main beneficiaries of the LMC’s activities. The Committee is not fooled into believing that these major processing companies would countenance any expenditure without significant return. The Committee considers that processors are at least equal beneficiaries of promotional work and their profitability, compared with farmers’ lack of profitability, suggests no different.

13.5 The producer sector voiced some concerns regarding the processor levy, particularly that primary producers would end up paying LMC levy twice, the processor levy having been passed back in costs to producers. The Committee shares these concerns. However, the Committee also notes NIMEA’s explanation of how levy is actually paid, with producer levy deductions shown on payment documents and the processor contribution paid from company accounts. NIMEA believes that this clearly demonstrates that producers are not funding the processor levy, and, in fairness, the method described seems reasonable and transparent. The LMC also expressed confidence that costs were not being passed to the farmer. However, company accounts are not always accessible and safeguards may be needed to provide the assurances that producers seek.

13.6 The Committee was disappointed at the Department’s response to the question about processor levy being passed back to producers. DARD states that it cannot interfere in a purely commercial matter. However, DARD must bring in the legislation that will provide for the levy collection to be made on a statutory basis and cannot relinquish responsibility for ensuring that the levy works in practice, including the methodology for collection of the levy.

13.7 The Committee therefore recommends introduction by DARD, at the earliest opportunity, of the legislative base for payment of processor levy. As part of this exercise, DARD must satisfy itself, through careful consideration of LMC records, that the current method of levy collection is transparent, workable and unlikely to result in the levy being passed back directly to the primary producer. If DARD is not satisfied, then it should, through the legislation, insist on the adoption of a more appropriate methodology.

14.1 The Committee was interested to note, from the five-year review and evidence, that current legislation allows levy to be collected from owners of cattle and sheep exported from Northern Ireland. The Department reported that arrangements are in place to collect levy on exports from GB and ROI.

14.2 In this context, NIMEA made a valid point regarding the loss of potential revenue to the LMC through half a million sheep moving to ROI, and suggested a ‘transaction levy’ such as operates in Australia. The National Sheep Association agreed with this and stated its belief that levy could be collected on all ewes, not limited to those slaughtered in NI meat plants.

14.3 The UFU takes a different position, suggesting that levies should only be paid at slaughter. This organisation does not support the extension of levies to dropped calves or on exports of live animals, but the Committee questions the Union’s assertion that these actions would be unworkable. Furthermore, it was reported as being the LMC’s stated intention to collect levy at livestock markets.

14.4 The Committee can agree with the principle that where LMC activities benefit the whole industry, they should be paid for by the whole industry. It follows that levies should, therefore, be extended to producers who currently benefit, but who do not take animals to slaughter. However, farmers’ ability to pay a new levy is questionable, short term, and a suggestion to introduce new levies would be contrary to the Committee’s agreed ‘policy’ on applying increases in costs to farmers. The Committee believes that such a levy could only ever be justified in the circumstances where both producers and consumers benefit.

14.5 At the time of taking evidence, the Department was engaged in preparations for the re-opening of livestock markets, following restrictions put in place to avoid further outbreaks of Foot and Mouth disease. The Committee considers that any new regime may provide opportunities to change policies and practice surrounding levy collection and that difficulties envisaged by the UFU might be overcome.

14.6 The Committee therefore recommends that the LMC intention to extend levies and collect these at livestock markets is taken into account as new arrangements for animal sales and movement are considered by DARD. The Committee further recommends that the intention to extend levies (and the rationale for the extension) is clearly stated, with a start date no sooner than April 2002. This will require appropriate legislative changes to be brought forward by DARD. It is the Committee’s recommendation that the new levy is set at a lower rate than the slaughter levy but that it should be commensurate with benefits from LMC activities, which the LMC should quantify and publicise as part of the advance notice referred to above.

15.1 In comparing the position of the LMC in Northern Ireland with similar organisations in Great Britain and the Republic of Ireland, the Committee noted that significant government assistance is provided to An Bord Bia in ROI. DARD frequently refers to EU State-Aid Rules as being a major obstacle to the provision of financial assistance. However, the Committee believes that, if the figures quoted by the LMC are accurate (£IR14m from government out of a £IR20m budget) then a precedent for state-aid has been firmly set. It should not be beyond the abilities of DARD officials to justify government assistance (at whatever levels) to the LMC.

15.2 The LMC reported that the Welsh Development Agency and the Scottish Executive provide support to Welsh Beef and Lamb promotions Ltd. and Quality Meat Scotland respectively. The Committee also notes that expenses are paid to MLC members by MAFF (as it was known). In her response to the Committee, the Minister stated that she was prepared to consider the costs of Commission members being met from public funds, but that she would wish to have clear, reasoned arguments as to why this is appropriate. The Committee considers that, where all of the LMC’s near neighbouring ‘competitors’ enjoy government assistance, and the Department recognises that the LMC requires more funding to carry out its responsibilities, then the appropriateness of at least meeting members’ costs is undeniable.

15.3 In clarifying that DARD does not provide core funding, the LMC outlined two occasions where funding has been provided for specific actions. These were a £250,000 injection for red-meat marketing support in the aftermath of the BSE export ban in 1996 and a sum of £2m provided for the implementation of the Red Meat Strategy. The Committee believes that the provision of this funding, where State Aids Rules difficulties have been overcome, and a clear need for £2m over 3 years for a red meat strategy established, presents a persuasive argument for ‘mainstreaming’ this level of support. The Executive also recognised the importance of red-meat marketing in agreeing a DARD bid for £0.5m in the 2001/02 budget. This, the Committee understands, is part of the £2m referred to above.

15.4 DARD has given no commitment to continuing this funding after the period anticipated for the red-meat strategy is completed. The Minister has, however, said that she will seek funding if necessary.

15.5 The Committee therefore recommends that DARD, in agreement with the Executive, should provide ‘mainstreaming’ of marketing support to the LMC in its budget. This would allow strategic development in this vitally important area. The level of such support should be determined through analysis of the activities and results of implementation of the red-meat strategy so far, and would be in the context of a clearly defined marketing strategy. The Committee further recommends that the costs of LMC members should be met immediately by the Department, to bring Northern Ireland into line with Great Britain.

15.6 The Committee also reflected on the National Sheep Association’s question about funds modulated from Sheep Annual Premium payments. The Association felt strongly that the money was being taken out of the sheep industry and that it should be spent on something that would benefit the industry. When the Committee put this proposal to the Minister, her response was negative, saying that DARD could only carry out what is contained in the Rural Development Plan. The Committee would remind the Minister that modulation was announced (by Nick Brown) as being intended for new activities and that these funds are coming straight out of farmers’ pockets. In a memorandum to the Committee, when modulation was first announced, the Minister confirmed that Treasury match funding of modulated funds may be used for wider activities than the four Accompanying Measures in the Rural Development Plan. The Committee suggests that DARD looks again at all possible options.

15.7 The Committee recommends that, since expenditure of even small amounts of Treasury match funding for discrete marketing projects would be a tangible return for funds modulated from farmers’ premia, DARD should consider carefully the provision of Treasury match funding to the LMC to enable them to undertake such actions.

15.8 During evidence, NIMEA made a point to the Committee about the divergence of effort by a number of government agencies involved in marketing Northern Ireland meat. Although NIMEA did not provide specific examples of such “meddling” (as it described these efforts), they spoke of embarrassment caused to customers through uncoordinated actions. NIMEA further recommended that the LMC was the one body with the knowledge, experience and contacts required and that it should be the body to ‘spearhead’ all such activity. The Committee would agree that all Departments and agencies should be pulling together in support of Northern Ireland products and believes that it is crucial for inter-departmental partnerships to be developed.

15.9 The Committee recommends that DARD take the lead in negotiating with existing agencies involved in meat promotion (and, in time, with the new ‘super-agency’) to ensure joined-up government and that a partnership approach, with full LMC involvement, is adopted.

16.1 In one of its submissions, the LMC reported to the Committee that the industry had reached agreement on upgrading the Farm Quality Assurance Scheme to achieve EN 45011 accreditation and that a sustainable funding arrangement was being put in place. This entails farmers paying an annual membership fee of £35 per annum and processors contributing £1 for every animal slaughtered on their premises. Income generated, the LMC assured the Committee, will cover the scheme’s costs. The Committee understands that a fee may prove difficult for farmers in their current financial state. However, the cash reserves which were, in effect, subsidising the FQAS scheme, have been exhausted and the importance of the scheme, to ensure the product meets customers’ requirements, is such that continuity of funding must be assured.

16.2 The Committee is, however, concerned that there is insufficient benefit, to the farmer, in the Farm Quality Assurance Scheme. The Committee believes that non-FQAS beef is reaching the same markets as that intended for FQAS beef. If the scheme is to be effective, there needs to be a clear distinction in those markets in order to re-assure both consumer and producer.

16.3 The Committee sees merit in clear lines of funding for the LMC’s activities. In the new system, the FQAS funds can be shown as entirely separate from those raised through levy. Likewise, the costs of the LMC’s classification service, and the fees raised from classification charges, should also stand-alone. If, as the Committee recommends, additional funding from government can be secured for the marketing and promotion functions, then the results of LMC expenditure should be much more apparent to farmers and their representatives, leading to greater understanding and acceptance of the organisation.

16.4 To sum up, the Committee believes that having the following items in place:

· a ‘mainstreamed’ element of promotional and marketing funds from government

would allow the LMC to fulfil its statutory and other obligations and provide it with the capability of acting in a planned and strategic manner.

16.5Throughout the Inquiry, the Committee formed the impression that producers felt that the LMC should be more accountable to them. In terms of funding of the LMC, the Ulster Farmers’ Union is reasonably satisfied with the openness of the organisation and that the LMC accounts are available to everyone annually to see what they do with the money. That is undoubtedly so, but farmers are not, in most cases, accountants and the Committee believes that straightforward, simple and transparent use of funding is essential to build a better understanding of the LMC amongst primary producers.

17.1 The LMC’s provision of a classification service was by far the most contentious and talked-about issue explored during the taking of evidence in this Inquiry. The Ulster Farmers’ Union stated that it was the biggest issue at all producers’ meetings and in all conversations with producers and processors. This is entirely consistent with representations made to members. All respondents acknowledged that the service was a source of frustration to producers, particularly because of its subjective nature and direct link to the price obtained for an animal.

17.2 The Committee fully accepts and acknowledges the statutory requirement for beef carcase classification, introduced through EU legislation in 1992. It further acknowledges that all beef carcases offered for trade must be classified in accordance with the European Classification Grid. It is the Committee’s understanding, from the evidence provided by the LMC, that there is no regulatory requirement for sheep carcase classification. However, classification is operated in sheep slaughter plants to help meet customer needs. It also results in the provision of information helpful to producers and producer groups.

17.3 The Committee also acknowledges that the LMC undertook to provide this service, following requests by producers and processors for them to do so as an independent body. It is clear that the LMC has no great desire to continue to provide the service, but that the organisation believes it provides a professional service to the industry.

17.4 The Committee was interested to note the meat processors’ concern that the LMC’s promotional independence may have been “tarnished” by its involvement in the classification service. This, together with producers’ concerns over the LMC’s independence from the meat processors, makes it clear to the Committee that a problem exists which must be tackled in the interests of improving relationships throughout the supply chain.

17.5 The Committee agrees that the question, “Who should provide the service?” must be addressed. The National Beef Association advocates that classification should be properly defined and presented to private companies for tender, and that the LMC would take on a role as inspector. The Northern Ireland Meat Exporters’ Association states that there may be an opportunity to establish a separate, exclusive and totally independent classification service. They feel that this would relieve the LMC of an extremely arbitrary function. The UFU argues that the LMC is best placed to carry out the classification function. That was also the finding of the Department’s five-year review.

17.6 The UFU point out that moving responsibility to another body will not eliminate the differentials and variations in grades, because of the subjective nature of the system. The Meat Exporters point out that the EU legislation permits meat plants to provide their own classifiers. They accept that this would not be seen as independent and question the practicalities of having different bodies trying to operate a European standard. NIMEA voiced no desire to change the current system.

17.7 The Committee is absolutely convinced that there should be one independent classification service and that any move by meat plants to employ their own classifiers would be met with dismay by producers. It would be impossible for these classifiers to command any perception of independence. During evidence, the Committee heard of no other existing body which would be capable of ‘picking up’ the classification service. The Committee has no wish to recommend a change in responsibility for the service, where there is no indication of widespread support for such a move, or any obvious benefit to producers from it. However, the Committee believes that there is not sufficient separation of the LMC’s classification service from its other activities to satisfy the demands of producers.

17.8 The relationship between grade and price makes it all too easy for producers to assume that retailers’ demands have led to commercial pressures being applied to grading staff through meat plant management. The opportunity to pay 6p per kg less for an animal by having it downgraded is an obvious temptation for meat plants. The fact that LMC staff work closely with meat processors, in taking forward their marketing and promotion role, will lead some to assume that close working relationships offer the opportunity for undue influence to be exerted by those processors. In the circumstances it is unsurprising that producers question the LMC’s independence.

17.9 The Committee concludes that a separation of the classification service from the LMC’s other activities is essential to improve producers’ overall perception of the LMC, to assist in producers’ understanding of the service and its necessity and to provide reassurances on the organisation’s independence in its dealings with meat processors.

17.10 The Committee therefore recommends that the LMC should build in a much greater degree of separation, and transparency, in their activities, whether through setting up a separate company for classification or by internal re-organisation. Charging for the classification service should be entirely separate and funds should relate only to the provision of that service, i.e. the service should stand alone, both organisationally and financially.

18.1 Whilst accepting that classification is a subjective exercise, the Committee’s view is that the standards, which are common across all member states, must be applied fairly, consistently, impartially and accurately. In this regard, the Committee believes that the Department, as the competent authority in Northern Ireland, has a crucial role to play.

18.2 LMC classification officers are licensed by DARD, having been approved through a testing procedure. The Department’s technical inspectorate then monitors the standards applied by the LMC staff. DARD reported that over 300 supervisory checks had been carried out over a 2 year period in a regime that aims to carry out supervisory checks on each classifier at least twice per quarter.

18.3 A higher level of supervision is carried out by the EU Control Committee on Beef Carcase Classification. However, the most recent inspection took place in 1998 and Northern Ireland was not included in that Committee’s programme of visits to member states in 2001. While this EU Committee remains the highest authority on classification matters, the infrequency of visits leads this Committee to conclude that DARD’s supervision of the application of standards is of the utmost importance.

18.4 The Committee was astonished to learn that, according to the European regulations, a classification officer is allowed to be wrong in 20% of his classifications (for both conformation and fatness) while still retaining his licence. In no other walk of life, the Committee believes, would as large a margin for error be permitted.

18.5 The LMC was at pains to point out that their staff do not err by 20%. Their margin is around 10% which, the LMC states, drifts in the direction of producers. Committee members were surprised at this assertion, and at the UFU’s apparent agreement with it. Members’ own experience of constituents’ comments does not indicate a ‘leaning’ towards the producer.

18.6 The LMC stressed that the margin is so high because of the subjective nature of classification. That may be so. However, the Committee believes that such a generous margin does nothing for the confidence of producers in the system and that the LMC must strive, in a very public way, to ensure that the actual performance is assessed (independently) to be within 10% and preferably nearer 5%.

18.7 How is this performance measured? The ‘correct’ classification is regarded as that made by the EU Classification Committee, consisting of 12 experts from a range of member states and the Commission. The members undertaking this Inquiry acknowledge the Department’s report of the findings of the EU Committee, following inspections in February and May 1998. Their report, and the Department’s subsequent investigations, found that standards were not being properly applied, with producers being given the benefit of the doubt in marginal cases. Further monitoring showed that standards were being applied and the Committee notes the findings in the EU ‘Mission Report’, dated 7 December 1998 (extracts included in Annex C1 of this report), in which there were “high standards of classification found in all the plants visited” and that “the majority of differences observed were within one sub-class”.

18.8 Such results, from an independent source, would have provided reassurance for producers at the time, provided that suitable publicity was given to the reports. However, with three years having elapsed since the last inspection, the Committee concludes that there is a need for more frequent reinforcement of such assurances.

18.9 The Committee believes that the more transparent the system of supervision by DARD, the more likely it is that producers (and indeed processors) will accept that the performance of the LMC classification staff lies within acceptable limits. If there are ‘leanings’ one way or another, it is reasonable that producers and processors should be made aware of these.

18.10 The Committee therefore recommends that DARD perform more regular formal checks (at least annually) in accordance with procedures adopted by the EU Committee (i.e. a panel of DARD staff performing personal classification and agreeing a ‘committee’ classification, against which the classifier’s grade is measured). LMC should state its aim for a 5% incorrect classification margin, in the context of the 20% permitted, and disseminate the actual results quickly and widely to stakeholders. The Committee is not recommending that an individual officer’s performance should be publicised, merely that the overall result of the service is available for all to see. Results should, however, be used internally by the LMC for training purposes.

19.1 As mentioned above, there are perceptions amongst producers that graders may be aware of plant management ‘looking over their shoulder’ in terms of the price they pay for certain grades. The processors themselves are at pains to point out that LMC staff attend their plants in a “third party guest” role and insist that they are under no obligation to the plant in which they operate. DARD has no evidence to suggest any influence and the LMC has little record of complaint from field staff, saying that plants would complain at the corporate, rather than personal, level.

19.2 NIMEA goes further to allege that there is, at times, considerable influence and pressure exerted on the classifiers to have carcases graded higher then warranted.

19.3 There was discussion about the merits of producers ‘following their animals through’ to see the grading – putting them in a position to appeal if they feel aggrieved by the grade awarded. NIAPA, in particular, felt that farmers should be encouraged to learn from bad grades. The example of sheep farmers was given – they may see the need to pick lambs earlier for slaughter on their next visit to the meat plant. NIAPA felt that problems surrounding grading may be solved if farmers went to meat plants to see their animals graded.

19.4However, it was reported to the Committee that farmers were actively discouraged by plant management from doing so. Anecdotes were told about threats to farmers that their animals would not be taken again if they appealed against grading decisions.

19.5 While such anecdotal evidence may not represent an indictment of plant management, the Committee believes that there is a culture amongst some meat plant management which holds primary producers in contempt. Recent allegations about factories changing grades after classification, suggest that some might also hold the grading system in contempt, and do nothing to improve farmers’ confidence in the classification and pricing process.

19.6 The Committee believes that, within health and safety constraints, farmers should have the absolute right to follow his animals (which are his very livelihood) through the grading process. Experience of the grading system is likely to improve the farmer’s understanding of it. Farmers should not, however, abuse this right by seeking to intimidate or otherwise unfairly influence the classifying officer. The Committee would see this as no better than plant management attempting to exert influence to downgrade a carcase.

19.7 In turn, the classifying officer must treat the farmer with respect, offering explanations of his decisions if these are sought.

19.8 The Committee also concludes that farmers who experience what they see as unfair treatment from plant management, in terms of access to grading or appeals, should report any such occurrence to the LMC. Any pattern emerging from these reports could be dealt with at the corporate level by the Commission members.

19.9 The Committee therefore recommends that plant managers should make appropriate arrangements for farmers to view, on request, the grading procedures and that the LMC maintains records of reports of any failing in these arrangements. The LMC should also consider whether additional training for its staff would be useful, for example interpersonal skills, to assist classifiers meet additional demands.

19.10 The Committee further recommends that DARD, as the ‘competent authority’ under European law regarding the classification of beef carcases offered for sale, must instigate an immediate, thorough and highly transparent inquiry into meat plant practices following carcase classification. The Committee believes that there must be absolute confidence in these practices to protect the integrity of Northern Ireland beef.

19.11 During evidence, the Committee heard that consistency of service may be a difficulty. The NBA stated that it did not receive complaints about classification at small meat plants, even though the same staff work in both large and small plants. There were alleged differences in grading standards between the ROI and Northern Ireland. Some farmers also believe that there are seasonal differences – i.e. grades are harder to achieve when there is over-supply of animals. It was also mooted (by NIAPA) that two different graders, working on the same batch of animals, may differ in their grading and that the grader’s mood may be a factor in awarding a grade.

19.12 These factors were worrying for the Committee. With the grading structure linked so directly to price received, it should be unthinkable that a farmer might lose out financially because someone has had a bad day. The Committee would argue that this is another reason for frequent checks on the standards of classification. Human frailties aside, there must be an assurance that LMC staff are providing an impartial and consistent service to both producer and processor. There is undoubtedly an onus on LMC management to drum this home at every opportunity and to ensure that theory is turned into practice.

19.13 To the Committee, the most worrying aspect of the allegations of inconsistency was the almost universal acceptance that most appellants or those with difficulties with the classification service, were farmers who brought animals to slaughter infrequently. The UFU believed that those who slaughter regularly are more skilled at selecting stock to the desired finished and slaughtering at the right time. NIAPA concurred – farmers who slaughter every week would be positive about the grading system, they said. What concerned the Committee was NIAPA’s belief that frequent slaughterers may build up a rapport with graders over time.

19.14 NIMEA also blamed the ‘once-a-year’ producers or cattle dealers who were “out of touch”. The LMC felt that the “big producers” understand the grading process and agree that grades are consistent and right.

19.15 The Committee is most concerned about these points. Firstly, there must be no difference in the standards applied to animals, whether they are brought forward by “big producers”, frequent slaughterers or the man who slaughters cattle once a year. Rapport and personal knowledge of farmers must not be a factor in grading decisions and LMC management must ensure that message is clearly given to staff.

19.16 It is bordering on contemptuous for the NI Meat Exporters’ Association to say that it is the mixed farmers, rather than the professional beef farmers, who appeal grades and who least understand the classification standards. Such an attitude of generalisation, if adopted by classification staff, would prejudice grading results before a carcase was even seen, and must not be allowed to prevail.

19.17 Rather than blame those with less experience for their lack of knowledge and understanding, meat processors, and particularly the LMC, should be making efforts to educate the infrequent slaughterer, and those who have mixed dairy/beef herds. This is another example of where communications with producers could be improved, with information and assistance targeted at those who most need it.

19.18 The Committee therefore recommends that the LMC communicates more clearly with producers regarding the standards applicable to grading. This should specifically target infrequent users of the service and should include more live grading demonstrations to groups of producers. The Committee also recommends that DARD should provide specific training to producers.

20.1 The current appeals process was described to the Committee by the LMC, DARD and the NI Meat Exporters’ Association. If a producer disagrees with a grade he may appeal to a senior LMC officer. There may not always be a senior officer on-site but the LMC assured the Committee that this was unimportant, given that the ‘proper’ grade should be assessed on a cold carcase in the chill.

20.2 The LMC reported that it maintains a full record of appeals and from this, notes that there is a strong correlation between volumes of appeals and price movements (i.e. when prices fall, appeals rise).

20.3 A chart submitted by the LMC in evidence suggests that there were between 25-85 appeals per month over a 2 year period. One month’s records were highlighted with 68 appeals covering 478 carcases (just over 1% of animals slaughtered) resulting in 19 carcases (4% of those appealed) being up-graded. It could be argued that this demonstrates that the original grading is generally correct. However, the Committee believes that the numbers reflect the importance of having an appeals procedure in place.

20.4 During evidence, the Committee heard the producer side call for improvements to the current appeals procedure. Both the National Beef Association and NIAPA mentioned the independence element. The Ulster Farmers’ Union and NIAPA called for an overhaul of the system to make it more user-friendly and credible to producer, grader and processor.

20.5 The Committee acknowledges that independence is hard to achieve. While the greatest number of graders (and, according to NIMEA, the highest competence) lies within the LMC, any external element for appeals will be difficult and potentially costly to introduce. However, if producers could be assured that, as the LMC put it, the Senior Officer considers the appeal grade only on the basis of the carcase and not on supporting his colleague, then the level of independence of the second grade might be acceptable to them.

20.6 The Committee accepts that there is currently no body to whom an independent appeals process could be entrusted. DARD does not have sufficient resources and the Committee has no wish to see increased costs, with these inevitably passed back to the producer.

20.7 NIMEA suggested that the first point of appeal should be the original grader, with the senior officer only brought in where the original grader refuses to change the grade. This seems patently sensible to the Committee, and, even though it may result in an increase in appeals, it may actually result in a reduction of costs if the senior officer is required in fewer cases.

20.8 The Committee believes that the LMC, in maintaining a full record of appeals, should look for patterns other than the link to price movements. It would be interesting, for example, to see where in the ‘grid’ the majority of appeals lie (i.e. between which grades). This information would be of interest to producers and may highlight areas where actions are required in terms of quality and finishing practices.

20.9 Of serious concern to producers was the practice of ‘aitch-bone hanging’ which distorts the carcase and makes it impossible to appeal against the original grade. The LMC acknowledges that this practice eliminates any appeals process. The Committee heard arguments against the practice, suggesting that the meat quality was not helped by such hanging. Indeed the NBA called for the practice to be banned. However, it is clear that there are major customers of the meat plants who demand aitch-bone hanging and it would be a foolish supplier who refused to meet his customers’ requirements. The issue must therefore be how to overcome the difficulties regarding appeals when this practice is in operation.

20.10 The Committee firstly recommends that the LMC investigates the practicalities of putting secondary full or spot-check grading in place in cases where Aitch-bone hanging is in operation. These cases should be known in advance by plant management and the LMC advised to allow planning. Secondary grading would provide at least some reassurance for producers, where they currently have no recourse to the appeals procedure, that the grade given to their animals was fair and reasonable.

20.11 The Committee further recommends that the appeals process is reviewed in consultation with the producer sector and that a first level appeal to the original grader is introduced. The LMC has undertaken to listen to alternative suggestions on the appeals process and it is imperative that producer representatives offer realistic solutions, rather than simply say “something should be done”.

20.12 The Committee’s final recommendation in this section is that the LMC should extend its record keeping of appeals and perform analyses of them. For example, the frequency, type and location of appeals, and appellant farmer-type, could be considered, and results of the analyses disseminated in the Annual Report.

21.1 The one area in the debate on classification on which there was unanimous agreement was mechanical grading. All of the producer organisations were in favour of the introduction of mechanical grading at the earliest opportunity, although, understandably, they were concerned that the machines should be accurate, consistent, fair and tamper-proof.

21.2 DARD, NIMEA and the LMC all agreed that they were in favour of such an approach, but warned that the technology was not yet ready to meet the demands of the European Union. DARD pointed out that current EU legislation links price reporting to the current classification grid.

21.3 The Committee noted with interest that the Meat Exporters were keen for the LMC to enter into a partnership with an organisation already pioneering work in this field, with a view to developing an electronic system. The processors undertook to operate trials in their meat plants, suggesting that a year-long trial would be worthwhile. The Committee would also like to see trials carried out in Northern Ireland. However, there would need to be an assurance that technology had improved from the systems that had undergone trials in the ROI. Although these were positive in terms of capacity to measure meat yield, they could not accurately and reliably allocate a grade to EU requirements. The Committee also felt that the LMC should involve its GB counterpart, the MLC, in partnership arrangements and in undertaking any trials.

21.4 NIMEA (and the LMC) went slightly further than simply advocating improved technology to meet EU regulations. They felt that the EU should be actively lobbied to adopt modern technology and to change the price reporting structure from subjective grading to one based on meat yields measured objectively. The Minister agreed that she would support this line in negotiations with MAFF (as it was) and the European Commission. This would seem to the Committee to be a sensible approach, particularly as the technology is available now.

21.5 Several of the groups giving evidence referred also to a ‘star’ rating system operated in Australia. The UFU explained that this system (The Meat Standards Australia Total Quality Management System) entailed the grading of meat according to eating quality, through analysis of critical control points in production, processing and value adding. The Committee believes that there must be thorough analysis of such a system, with a view to its introduction in the European Union. The LMC could play a role (albeit a small one) in this review.

21.6 Some of those giving evidence raised concerns regarding the costs of introducing mechanical grading. This is an issue that would warrant careful consideration. There would be installation costs and training costs at the very least. There would be costs associated with a trial scheme as well. The Committee believes that up-front costs should be met by the factories, with reasonable assistance from government, either directly or through the LMC.

21.7 The Committee also recognises that there will be an employment issue if mechanical grading is introduced on a widespread issue. The skills of the LMC’s grading staff (and DARD supervisory graders) would no longer be required. The Committee believes that these staff should be offered the opportunity to train in the use of mechanical equipment, in the hope that retraining would safeguard jobs.

21.8 The Committee recommends a two-strand approach. Firstly, the introduction of a technologically improved mechanical system on a trial basis in one or more Northern Ireland meat plants. Secondly, negotiation with DEFRA and the European Commission regarding a review of alternative systems, such as the Australian model, and on reviewing the current links between grading and price reporting.

22.1 Finally, on the classification issue, the Committee noted comments made about the current price structure. It seems that all are in agreement that there are far too many grades and that arbitrary price levels within these grades are unhelpful. The Committee agrees with the UFU’s view that there would be many less complaints about classification if it were not so closely linked to the payment structure. The UFU referred to work carried out by the LMC, in which the variation between some of the grades was only 1% but the cut in price was 6p per kg.

22.2 There has already been a great deal of negotiation to have the number of payment bands reduced and the Committee believes that this is an imperative, while the subjective system of classification remains.

22.3 In the Committee’s Report “Restoring Profit for the Beef Producer”, the Committee recommended that processors must alter their pricing policies to offer strong incentives in favour of higher quality carcases. Evidence to this Inquiry reinforces the Committee’s belief in this recommendation. When a representative of one of the major meat processors agrees that the price paid for cattle at the top end of the scale is too little, the Committee sees no reason why this matter can not be resolved quickly and to the satisfaction of all sides.

22.4 The Committee therefore repeats its recommendation that meat plants must make changes to their pricing structures and urges the LMC to broker a ‘deal’ on this matter with all haste.

23.1 The Committee acknowledges and was grateful for the very comprehensive summary of activities provided by the LMC. The Committee recommends that interested readers of this Report spend time reading the summary (contained in Annex D1 of Appendix 3 of this Report) in order to become more fully informed about these matters.

23.2 The Committee was most interested to read, from the submission made by the LMC, the nature of activities in which the LMC is involved. It appears to the Committee, however, that there is a dearth of knowledge, amongst Northern Ireland’s farmers, of the LMC’s approach, activity and the outcome of its promotional work. For example, the National Sheep Association claimed that the LMC is not good at communicating with farmers. Others (the NBA and NIAPA Ruling Council) could not comment on the LMC’s promotional work.

23.3 The Committee contends that communication of the LMC’s priorities in promotional work to producers is paramount. Members were astonished to hear a representative from NIMEA state that “the fact that farmers do not know what the LMC is doing is not the issue”. In the Committee’s view it is entirely the issue, and may account for many of the negative perceptions of the LMC held by farmers, who, after all, are payers of the levy which enables the LMC to undertake their activities.

23.4 Farmers would be the first to admit that they are not good at marketing themselves. Often, as highlighted by the NBA, farmers simply wish to ‘get rid of’ their animals. There is, according to the evidence, a recognition by some farmers that the LMC is capable of doing a good job and that farmers need the organisation: the UFU and the NBA were both positive about the LMC’s work in Europe prior to BSE. On the other hand, however, there are question marks over their current activities: the UFU, for example, claims that farmers are disillusioned at the LMC’s performance in promotion in the home market. NIAPA Ruling Council suggests that the benefits to producers of promotion and marketing is insignificant.

23.5 The Committee has no doubt that the LMC can explain its promotional work – it has taken care do so to this Inquiry. What is in doubt is whether the LMC is currently providing enough explanation of that work to an important set of stakeholders – the farmers.

23.6 The Committee notes the praise heaped upon the LMC by the NI Meat Exporters’ Association: promotion is one of the LMC’s strongest points, the customer’s belief in the independence, integrity and foresight of the LMC and so on. No doubt, the LMC Commissioners and staff draw great comfort and professional satisfaction from such remarks. However, in the absence of greater understanding by producers of what is being done, why it is being done and, in particular, why the processors are so closely involved in the work, such comments will merely reinforce producers’ belief that the LMC is “too cosy” with the meat plants.

23.7 If it is farmers’ ignorance which is the cause of such perceptions, farmers themselves should not be blamed for this ignorance. It is incumbent on a body working on behalf of the whole industry to ensure that the whole industry is aware of, and supports, what it is doing. It is an indictment of the LMC that the National Sheep Association can ask how the LMC measures success (when the LMC says that the promotion of lamb at a German trade show proved successful). The Committee believes that producer bodies must be fully informed of performance, and given facts to support assertions of ‘success’.

23.8 In its own questioning about how the LMC’s promotional activities are measured, the Committee established that where public funds have been used to support promotional or marketing activities, then a condition of support is the provision of a report on the activities’ success in meeting objectives. DARD, for example, seeks evaluation reports, and the Minister is satisfied with the results of these.

23.9 The Committee had sight of one independent evaluation, dated March 2001, carried out on a LMC campaign funded through the European Quality Beef Promotion Scheme. This is reproduced in Annex D1 of Appendix 3 of this Report. The Committee recognises the evaluation’s conclusions as having been very positive, and believes that information such as is contained in this evaluation should be made widely available and given significant publicity. In this way, stakeholders in the LMC will be kept much better informed.

23.10 The Committee therefore recommends that the LMC should provide prior notice and information about specific promotional activities. It should then provide timely feedback and evaluation of these activities. This clear communication with producers and other stakeholders (through methods recommended earlier in this report) will result in a greater understanding of the benefits to producers and others. This should also apply to existing activity – an example being greater clarity in what is being bought through the LMC’s contribution to the Meat and Livestock Commission.

24.1. In considering its views on the priorities for LMC promotional activity, the Committee took note of the two ‘guiding principles’ outlined in the LMC submission. These reflected firstly upon the fact that Northern Ireland could not produce red meat at a low cost, pointing to the need to ensure as much production as possible is supplied into the highest value markets available. Secondly, the LMC recognises that its marketing function must be at the generic level and that its activities must complement those of the processors and retailers.

24.2. The Committee has no difficulty whatsoever with the first principle. The Beef Report from the Committee’s Debt Inquiry contained several references to the need to secure premium and niche markets. The final part of the second principle is less clear. The Committee accepts that, in the absence of exports to Europe, the premium multiple retailers in GB currently offer the best market for NI beef. It would be pointless to get involved in retailer-related promotion that was at odds with the processors and their customers. However, the Committee believes that this principle should not deter the LMC from activities which may ultimately be in competition with the joint activities of the processors and retailers.

24.3. The LMC splits its promotional activities into three discrete geographical areas: Northern Ireland, Great Britain and international. Funding is distributed virtually evenly among the three.

24.4. The LMC made reasoned arguments in support of its activities in all three areas. The Committee, in considering these activities, finds it easy to understand why producers, involved in the long process of rearing animals from birth to slaughter, may not fully appreciate the point of the LMC’s work. There is no immediate, tangible or direct benefit to these farmers from expenditure in any of the three areas. A farmer’s conclusion[41] that the LMC has failed miserably with regard to promotion, is therefore unsurprising. However, that is not to say that the activities themselves are without merit or indeed that they do not offer quite significant indirect benefits to the farmer.

24.5. The Committee believes that this once again comes down to communication and understanding. Farmers would be quick to agree the importance of securing the next generation of potential consumers as actual consumers of red meat, particularly in the context of a vociferous pro-vegetarian lobby. The LMC reports a productive working relationship with schools, demonstrating the health and nutritional values of beef and lamb. Members of the National Beef Association delegation felt it to be extremely important work, for which the LMC was to be complimented. NIAPA felt that the schools work should continue. The independent evaluation, referred to earlier, was also positive about this work.

24.6. The Committee must therefore conclude that the funds spent on education (two thirds of £400,000) are a necessary investment in the future of the red-meat industry in Northern Ireland.

24.7. The Committee also concludes, however, that there is scope for more tangible marketing in Northern Ireland. The NBA seeks the use of LMC funds for promotion of auction marts. They also see the need for work on domestic retail and catering markets. The NSA wants to see lamb promoted better on the home market, particularly in hotels and restaurants. The UFU has expressed its members’ disillusionment over the promotion of NI beef on the home market in terms of its quality and diversity. The potential market may be relatively small in comparison with the GB multiple retail market. However, the Committee would conclude that the home market offers an opportunity for the LMC to undertake relatively inexpensive promotion that would have positive benefits for the profile of the LMC in addition to the objectives of the campaign itself.

24.8. The Committee therefore recommends that the LMC reviews its Northern Ireland activities, with a view to developing a local promotional campaign to increase the use of NI beef and lamb, both in catering and domestic outlets.

24.9. Turning to the LMC’s activities in Great Britain, there is a reluctant acceptance amongst the producer organisations that the multiple retailer market is currently ‘the only show in town’, and that the LMC has played a part in securing that business. The UFU reflects that “like it or not” NI farmers must work with the supermarkets.

24.10 The LMC advises the Committee that it is vital for this GB retail business that NI beef can use the “British Meat” brand. It is to ensure qualification for this brand that the LMC has agreed to provide £450,000 per annum for 2 years to the Meat and Livestock Commission. Once again this might seem like money spent to no local avail – the brand is not used widely in Northern Ireland. However, the GB market in beef has grown, according to the LMC, by 5% since 1995 and is the only market in Europe to show this growth.

24.11 The UFU has called for more clarity in the LMC’s relationship with the MLC, even though they acknowledge that the relationship has helped the growth of NI beef’s share of the GB market. NIAPA was satisfied that the use of MLC’s expertise and documentation provided value for money.

24.12 The Committee has often heard very justifiable concerns about the difference in prices between GB and Northern Ireland. This is a ‘running sore’ and, in accordance with a Committee recommendation, the Department has it under investigation. However, the LMC points to the price differential between NI cattle over ROI cattle, which they give as 9p per kg or £27 per beast, as the actual benefit of accessing the GB retailer markets. This would equate to a benefit of over £10m per annum.

24.13 The Committee also accepts that retailers can source beef from wherever they choose and it is absolutely vital that the market share is secured. The Committee finds it difficult to argue with the rationale of ‘tapping in’ to an existing promotional campaign. Given the amount of money spent by the LMC, a stand-alone campaign would be small-scale and ineffective by comparison.

24.14 The Committee does not necessarily accept the ‘doomsday scenario’ offered by NIMEA if promotional activity was to be stopped or curtailed. However, it recognises that, in a competitive environment it is almost inevitable that mere maintenance of market share comes at a cost.

24.15 If the GB campaign continues to shift larger quantities of beef through the supermarkets, and NI beef retains or improves its market share of the GB supermarket trade, and the LMC is certain that there is no other way to secure use of the “British Meat” brand, then the Committee must conclude that the expenditure of £450,000 represents good value for money.

24.16 The Committee therefore recommends that the LMC maintains its relationship with the MLC and negotiates an extension to its current agreement.

24.17 The third area of coverage for the LMC’s promotional activities is of course ‘international’. The Committee understands completely that many farmers see no point in ‘export marketing’ when beef exports have been denied them for so many years. Thus, the third nail in the promotional activity ‘coffin’ is hammered home.

24.18However, the industry must maintain a level of readiness for the eventual re-opening of these markets. The Committee’s report into the beef sector recommended that the Department should vigorously continue its direct and indirect actions in supporting the re-opening of European markets. The same must also apply to the LMC and the Committee sees merit in developing the ‘world map’ of the red-meat industry and in brand research. Those merits, however, are difficult to demonstrate and must be kept under careful review.

24.19 There would be a question mark against attendance and support at major international food fairs, where it is not possible to secure immediate business. However, the Committee also accepts that future competitors will be present at these events. Within the independent evaluation, mentioned previously in this report, there was a general recommendation that some type of evaluation is carried out for events that the LMC attends. The Committee would agree that this is particularly important for international events.

24.20 Virtually everyone who gave evidence recognised the success of the ‘Greenfields’ brand prior to the BSE ban. The Committee shares the industry’s hopes and expectations that this brand will once again provide particular benefits to NI beef sales once exports resume and agrees that the LMC should continue its investment in the brand.

24.21 In common with other areas of the LMC’s work, the Committee believes that better representation of these activities to the producer sector may well bring greater acceptance by producers of the rationale for this work. A willingness to sacrifice what might be seen as ‘junkets’ abroad could well lead to greater satisfaction levels but this should be considered against the benefits of participation.

24.22 The Committee therefore recommends that the LMC reviews its international strategy, particularly its attendance at international fairs, in order to identify less costly methods of maintaining the important contacts with potential customers. The LMC should also give serious consideration to skewing resources, in the short term at least, from international to Northern Ireland promotion.

24.23 During discussions on the international efforts, the Committee was reminded that a significant proportion of NI lamb is exported. As part of a review of promotional activities, the Committee believes that the LMC should consider ways of improving promotion of NI lamb. The producer side acknowledges that funds secured through levy of lambs slaughtered are insufficient to mount any significant campaign but the fact remains that lamb is being exported and so the potential for new and better markets should be explored.

24.24 The NSA suggested that something similar to the ‘Greenfields’ brand would work well for NI lamb, particularly as both the Scots and Welsh have successful lamb branding. The Committee considers that the LMC should investigate this possibility, and awaits the results of work due to be commissioned by the LMC on the potential scope for branding Northern Ireland red-meat. This proposed study was referred to by the Minister in her response to the Committee’s Report “Restoring Profit to the Beef Producer”.

24.25 One further lamb-related area is in the promotion of NI pedigree sheep genetics. The NSA reported that the MLC gives assistance to pedigree breeders and the Committee would ask the LMC to consider its position with regard to this.

25.1 In taking evidence for the Committee’s first report from the debt Inquiry: “Retailing in Northern Ireland – a fair deal for the farmer?”[42] there was an offer made by a major retailer to participate in new bodies or schemes in which they could offer advice using their knowledge of the market. The Committee recommended that this offer must be taken up but has seen little sign of action on this front.

25.2 The Committee put it to the LMC, DARD and NIMEA that the retailers could make a contribution to promotional activities, as they would benefit from them. DARD acknowledged that retailers benefit from the LMC’s activities but felt that they would be reluctant to contribute. The Meat Exporters demonstrated their narrow viewpoint by attacking the Committee’s lack of “understanding of the trading contract relationship between a supplier and a retailer”. However, the LMC agreed that retailers were willing to participate, citing their collaboration with Tesco in the promotion of Aberdeen Angus beef in January 2001.

25.3 Much was made, by the Meat Exporters, of the money spent by both processors and retailers on promotion. However, the Committee is not interested in this – the Inquiry was into the LMC’s promotional activities, in the generic sense, and the Committee’s desire is to see the expertise available within the major supermarket chains being harnessed to the benefit of the NI industry.

25.4 Despite NIMEA’s protestations that neither LMC nor political approaches should be made to retailers which would affect relations between retailers and suppliers, the Committee recommends that the LMC explores all possibilities of involving retailers and availing of their expertise when planning and undertaking promotional activity.

26.1 The Committee was interested, but not surprised, to note the differences of opinion expressed about the need for increased producer representation on the board of the LMC.

26.2 All of the producer side agreed that the current situation, with two farmers on a Board of seven, did not reflect the fact that producers provided the main element of funding for the Commission, nor the producers’ stake in the overall industry. Indeed, the fact that neither of the two farmers depended on farming for all of his income made the situation even less satisfactory.

26.3 The affiliations of the remaining five members led many on the producer side to the conclusion that the LMC had a bias towards the processing industry.

26.4Unsurprisingly, producers called for an increased representation for farmers on an expanded Board (of eight or nine), with the UFU seeking three and both NBA and NIAPA looking for four full time farmers. Only NIAPA Ruling Council were set against an expansion of the Board.

26.5 NIMEA, as the Committee would also have anticipated, saw things differently. Their view was that the Board should be made up of strong, senior experienced meat industry personnel, who should be able to demonstrate marketing vision and contribute to the marketing potential of the industry. NIMEA’s vision was for two farming representatives out of a board of nine, with three reps from the processing sector.

26.6NIMEA’s rationale for the low farmer representation appears to be that farmers are not the best to be involved in marketing – citing the demise of farmer-controlled marketing boards. The Committee accepts that farmers are not great marketers. However, it is doubtful that a director of a meat processing firm could bring livestock from birth to slaughter and the Committee believes that it is essential to have a balance of expertise on the board.

26.7 The Committee was encouraged that the LMC representatives acknowledged the critical importance of producers being represented and that their view was that an expansion of the board to nine should allow one additional ‘player’ representing farmers’ interests. The Committee accepts that other interests must also be represented. It was stated that the LMC is much larger business than a producer-owned organisation. However, it is also much more than a pure marketing organisation, which seems to be where the NIMEA interest begins and ends.

26.8 The Committee concludes that a producer representation of three to four on a board of nine would be sufficient to allay current fears about under-representation and bias towards the processing industry.

26.9 The Committee also noted two other ‘groups’ which were not represented. There are currently neither women nor consumers/retailers on the board. The Committee believes that it is important for these imbalances to be rectified and noted the Minister’s intention to address the gender balance within the Nolan guidelines.

26.10 The Committee understands that the Minister’s intention is to consult with the Commission and other relevant industry organisations if the Board, as widely expected, is to be increased to nine. The Committee believes that the qualities outlined by the LMC in its submission to the Inquiry are a reasonable starting point from which to ensure that the make up of the board is as required.

26.11 There was some discussion about whether there was a conflict of interest in having the Chairman of NIMEA also on the Board of the LMC. The individual involved saw no conflict – indeed he felt that the ability to makequick decisions without lengthy consultations was a strength. The Committee does, however, understand producers’ concerns that someone so close to one part of the industry may lead the LMC to decisions which are beneficial to that side of the industry. It is the Committee’s view that it would be preferable for board members to hold less influential positions within the meat industry.

26.12 The Committee suggests that a code of conduct for members, detailing the behaviour expected of members regarding their own sector, should be developed and widely published. This would allow onlookers to assess members’ actual behaviour against that expected of them.

26.13 The Committee recommends that the LMC board is expanded to nine with producer representation increased to at least three and preferably four. The LMC, together with DARD, should consider the implications of havingcurrent meat plant directors on its Board. They should also draw up and publish a code of conduct for members regarding their behaviour towards, and contact with, their own sector.

27.1 The Minister made it clear that all appointments to the LMC are carried out in accordance with Nolan principles. As the LMC is a non-Departmental Public Body (NDPB) the Committee accepts that the Minister is bound by these principles and that the Office of the Commissioner for Public Appointments (OCPA) can and will appoint auditors to ensure Departments follow those principles. The Minister reported that auditors have reviewed the appointments to the LMC on two occasions and found them to be in compliance with the principles.

27.2Furthermore, the Committee accepts that the existing legislation requires that the Minister must make all appointments to the LMC. Compliance with principles and legislative requirements does not, however, mean that improvements should not be considered.

27.3 The Committee was somewhat bemused by NIMEA’s call for exemption to the Nolan principles, and their assertion that the principles contribute to mediocrity. NIMEA appears to object to the openness of the system, which allows anyone to apply. NIMEA would prefer to see appointments from nominations, presumably including their own, outside of Nolan procedures. If the Department ignored the Nolan procedures, it would be wide open to criticism from many quarters.

27.4 The UFU also expressed a preference to be able to nominate, but did not comment on the use of Nolan. NIAPA did not wish to see specific groups or associations have the power to nominate.

27.5 The Committee’s understanding of the process is that anyone can nominate anyone for consideration for a public appointment. Provided that all interested parties are made aware of any vacancies, then the point about nomination should be irrelevant. If NIMEA wishes to nominate an individual, then it can do so, likewise the UFU.

27.6 The Committee further understands that the Department should agree a ‘balance of competencies’ required in the board and take into account skills and competencies that are required whenever there is a vacancy on the Board. If managed correctly, this should allow DARD to control the sectoral balance of the board through ensuring that the ‘person specification’ reflects the competencies required for the specific vacancy.

27.7 The Committee believes that the Department should carefully consider the formal qualifications it requires of applicants to be eligible for appointment, to ensure that farmers, or other groupings, are not ruled out unnecessarily.

27.8 The Committee therefore recommends that DARD engages with the Chief Executive and Chairman of the LMC to develop a full ‘balance of competencies’ required on the board. This should reflect the qualities outlined in the LMC submission to this Inquiry. It should also be subject to consultation with the industry and the agreed version widely publicised. DARD should also use this balance of competencies to draw up the specification required for each individual vacancy, so that the balance of skills is maintained. No formal qualifications should be required unless absolutely necessary to a particular vacancy.

27.9 The Committee found it odd that neither the NBA nor the NSA had had any involvement in the appointments process to date, nor had they been given notice of vacancies. NIAPA also reported that they had never been involved in the process. In addition, the NSA said that none of its members saw the most recent advertisement. Despite the Minister’s assurances about how the Department identified the field of candidates, the Committee believes that it is not good enough for farmers to learn of vacancies in the LMC only when appointments are being made.

27.10 The Minister stated that vacancies were advertised in the main Belfast newspapers. The NSA pointed out that farmers were more likely to apply if an advertisement was placed in ‘Farming Life’ or ‘Farm Week’. The Committee agrees entirely and concludes that the Department must make a greater effort to reach a higher number of potential applicants.

27.11 The Committee therefore recommends that future vacancies are advertised in the agricultural press as well as the Belfast newspapers, and that all electronic and other means should be used to ‘trail’ the appearance of these advertisements for a 3-4 week period before the adverts are placed. The Department should also ensure that all producer organisations known to it are informed of forthcoming vacancies.

27.12 The length and terms of appointment to the LMC was another issue which arose from the evidence. The NBA felt that the Board membership should change completely after either one or two years and that there should be no ‘salary’, merely expenses. Their rationale for such a move was that members would not be seen, or consider themselves as, employees of the LMC. The NBA saw no reason that this move should lead to a difficulty in attracting people of the right calibre.

27.13Currently, terms of appointment are for three years. The Nolan principles state that re-appointments should not be automatic, and should involve some form of assessment. They further advise that second re-appointments should be exceptional. The Minister assured the Committee that the Department follows Nolan procedures in re-appointing members. The Department seeks an assessment of the member from the Chairman, covering issues such as attendance, involvement in Commission activities beyond Board meetings and the contribution made to the overall work of the Commission. This appears, to the Committee, to satisfy the Nolan procedures.

27.14 The Committee is more concerned about second re-appointments. The current Chairman has been a member since 1992, appointed Chair in 1997 and re-appointed Chair until October 2002. Two other members were re-appointed from January 2000 and a fourth member has been in the LMC since 1995. If second re-appointments are to be the exception, then it follows that there must, over the next two years, be a significant turnover in the membership of the LMC.

27.15 The Committee recognises the benefits of continuity. However, there are reasons that any board membership should change, and these apply to the LMC. The Committee believes that one re-appointment to the Commission is enough and that second re-appointments should only be made in the most exceptional of circumstances. The Committee suggests that, with up to four members having to step down, and an expected extension of membership of the board from seven to nine, the Department should waste no time in beginning the appointments process to ensure that suitable candidates are available to replace present incumbents.

27.16 The Committee believes that it may be more beneficial to limit the ‘salary’ or fee paid to LMC members. There might be a tendency for producers, or others, to assume that, where members receive a fee from the LMC (over £5,000 per annum) they may feel an obligation to the Minister who appointed them. This perception would be allayed if members’ expenses only were paid. There is, of course, a counter argument, that the fee is an incentive to apply and the Committee can see the attraction to a farmer, for example, to supplement his income through membership.

27.17 The Committee therefore recommends that DARD should review its own non-Departmental Public Bodies, and seek advice about others, to establish whether or not the current salaries paid to members are consistent with similar appointments across Northern Ireland.

27.18 The Committee further recommends that the Department should draw up a timetable for changes to the LMC and begin the appointments process immediately, taking into account the recommendation made earlier regarding the balance of competencies.

27.19 One other suggestion made during the Inquiry was that payments to Board members should be linked to members’ attendance at Board meetings. The Committee believes that this is a sound principle. Members accept the Minister’s reservation about taking account of time spent on LMC activities outside formal meetings. This should, however, prove manageable. The Minister also had a concern that such a rule may have adverse implications in attracting high calibre candidates. The Committee believes that the Board members must be dedicated to their task and that attendance should be expected of someone who nominates themselves to ‘serve’.

27.20 The Committee therefore recommends that the Department introduces procedures whereby payment of salary is dependent upon attendance at Board meetings and/or involvement in ‘external’ LMC activities.

28.1 There can be no doubt that there exists a negative perception, among many farmers and their representatives, regarding the relationship between the LMC and the processing industry. Whatever the arguments about the necessity of working closely with each other, the Committee believes it is imperative for there to be a clear distinction between the two, and for farmers to be reassured that the LMC’s commitment to them is not compromised by this relationship.

28.2Furthermore, in an era when information has become more accessible and communication is so crucial, it is disappointing to find producers expressing frustration at the LMC’s communication with them. There is clearly a need for the LMC to review its style and methods of communication – the onus is on the LMC to meet its customers’ needs.

28.3Together, these factors point to a need for the LMC to ‘re-invent’ itself in terms of farmers’ perceptions and to demonstrate, unequivocally, its impartiality and independence. Importantly, the LMC’s ‘sponsoring’ Department, DARD, must also enhance its role in monitoring the LMC’s activities, particularly in the supervision of classification standards and in expediting its five-year reviews.

28.4Furthermore, the Committee has concluded that an agricultural forum, in which all elements of the supply chain participate, could improve relationships within that supply chain, and has recommended its development.

29.1 The Committee concludes that changes to the current system of funding the LMC are essential, that they should be made in the near future and that they should be radical. Given that some increase in costs to primary producers is inevitable in the longer-term, the Committee also concludes that the changes must be sensitively managed, with full consultation with, and explanation to, producers.

29.2 Further conclusions are that all those who benefit from the LMC’s activities should contribute to the costs of these activities, that levy on processors must be transparent and that the LMC should not be disadvantaged against ‘competitor’ organisations in other countries.

29.3 The Committee also concludes that a clear need has been identified for a medium to long-term marketing strategy for Northern Ireland red meat, thus justifying the ‘mainstreaming’ of government support. That support should be co-ordinated and integrated through ‘joined-up government’. The Committee’s belief is that this approach, rather than short-term (and piece-meal) project-based one employed to date, will allow strategic development of the LMC’s marketing activities, thus building on successes to date.

29.4 In all parts of the LMC’s operations, the Committee concludes that clear accountability for use of funds is essential and, in terms of producers’ understanding through better communication, could be improved.

30.1 The provision of a classification service is, the Committee concludes, the LMC’s biggest problem. When both processors and producers express concerns about the LMC’s involvement in classification (albeit for very different reasons) the importance of the problem should not be underestimated.

30.2 The Committee concludes that the only way of addressing the difficulty is for a far greater degree of separation to be brought in between the classification service and the LMC’s other activities.

30.3 The performance of the LMC’s classification officers is also questioned by the Committee, not specifically relating to individuals, but to the standards which they are expected to meet. The Committee’s belief that a 20% margin for error in classifiers’ performance is much too great, and higher than in virtually any other job or profession, will be mirrored by many producers. The Committee concludes that the classifiers’ performance must be demonstrably better than this, in order to build producer (and indeed processor) confidence in the grading and payments system.

30.4 That current system is also called into question by the Committee and, it concludes, must be changed quickly. It has plenty of detractors and no ‘champions’ among the industry. Too many grades, with arbitrary and unfair price levels attached to these grades, have brought the whole system into disrepute and all sides agree that change is essential.

30.5 There was also widespread support for the introduction of mechanical grading and the Committee concludes that this must be pursued with vigour by the entire industry, and accepted by the European authorities.

30.6 The Committee concludes, as it has done in previous reports, that the supply-chain relationships must be improved, but that the processors have little desire to facilitate such improvement. It appears to the Committee that the primary producer is under-valued by the rest of the supply-chain, despite the extent of his role in bringing an animal from birth to slaughter. This, the Committee believes, must be addressed in the context of carcase classification as much as in other areas. Improvements are therefore necessary in terms of farmers’ access to grading standards information, to meat plants themselves and to a credible appeals system.

31.1 The Committee’s main conclusions from investigating this aspect of the LMC’s work must be that there is insufficient understanding of the rationale for the activities and of the activities themselves, and that the LMC must address this lack of understanding.

31.2 The realities of a competitive market are such that market-share is difficult to improve and even to retain. The Committee concludes, however, that these realities must be better explained to primary producers. Without the efforts of the LMC in helping secure the business with GB multiple retailers, for example, the Northern Ireland beef industry would undoubtedly be much worse off than it is. That is not to say that doing business with retailers has resulted in a fair deal for the farmer – the Committee’s earlier report showed clearly that this was not the case – but at least an outlet has been secured. The ways in which the business is retained and the consequences of losing that business, if better understood by the producer, may go a long way towards producer acknowledgement and acceptance of the LMC’s role.

31.3 The Committee could only conclude that the funds spent by the LMC were justifiable in each of the three geographical areas: local, GB and international. The Committee did, however, conclude that more visible work in the home market would have a beneficial effect on producers’ perceptions of the LMC’s promotional activities.

32.1 As another area of contention, the Committee concluded that there was also room for improvement in the way in which appointments are made, in the ways that board members relate to their own sectors and in the make-up of the board itself.

32.2 It was easy for the Committee to agree with those who wished to see better producer representation on the LMC. As a major contributor to the LMC’s funding, the producer sector is absolutely justified in seeking to ensure that its interests are fully understood, acknowledged and taken into account as the LMC agrees its strategy and priorities. The Committee also agrees that a wide range of skills and expertise is essential for a strong board, and that it should not therefore be exclusively farmer-orientated. However, the Committee felt that a stronger and bigger producer representation was necessary to improve the LMC’s credibility amongst producers.

32.3 The Committee considered producers’ concerns related to the appointment of serving plant management to the board, and the alleged ability to exert undue influence on the Board’s policy, in favour of the processing sector. The Committee concluded that the relationship of all members with their ‘own’ sector should be as transparent as possible and be subject to monitoring and control. It also concluded that if the LMC’s working relationship with processors was fully documented and understood, there would be less producer concern over this relationship.

32.4 A further conclusion reached by the Committee was that the sponsoring Department, DARD, could do more to ensure the best balance of skills and expertise is available for selection onto the board. This would be achieved through improving its appointments procedures, particularly in ensuring that a widely accepted set of required competencies is established and understood, and in making vacancies known to a greater number of potential applicants.

32.5 The Committee ultimately wishes to see a board appointed in which all parts of the supply chain have full confidence and in which members are seen to act impartially and independently with a full understanding of the circumstances faced throughout the chain. It concludes that this is possible through a realignment of board membership, a formalisation of relationships with the various sectors and through transparent appointment procedures.

33.1 The Committee firmly believes that implementation of the recommendations contained in this report, aimed as they are at the LMC, DARD, the meat exporters and producers, would bring an improvement to the LMC’s operation and a greater acceptance of the organisation by a larger number of producers.

33.2 The Committee expects the LMC, in particular, to respond positively to these recommendations and, with the help of DARD and others, to bring about change beneficial to the entire red-meat industry in Northern Ireland.

33.3 The Committee would welcome reaction to this Report from any source. If you wish to comment on it please write to the Clerk of the Committee, Mr Paul Moore, in Room 401/D Parliament Buildings, Belfast BT4 3XX or e-mail him at:

[1]Submission of 21 April 2001 (Annex F1) and paragraph 585 of Minutes of Evidence

[2] Submission of 6 June 2001 (Annex G3) and paragraph 675 of Minutes of Evidence

[3] Submission of 27 March 2001 (Annex A1) and paragraphs 38-39 of Minutes of Evidence

[4] Submission of 1 May 2001 (Annex I2)

[5] Submission of 16 April 2001 (Annex E1)

[6] Submission of 23 May 2001 (Annex C3) and paragraphs 220-221, and 285 of Minutes of Evidence

[7] Submission of 12 April 2001 (Annex D1)

[8] Submissions of 21 April and 8 June 2001 (Annexes F1 and F3) and paragraph 568 of Minutes of Evidence

[9] Submission of 18 April 2001 (Annex G1) and paragraphs 676-677, 681-682, 685-687 and 764-769 of Minutes of Evidence

[10] Submissions of 27 March and 11 May 2001 (Annexes A1 and A3) and paragraphs 7, 76 and 121 of Minutes of Evidence

[11] Submission of 4 April 2001 (Annex B)

[12] Submission of 5 April 2001 (Annex I1)

[13] Submissions of 16 April and 15 May 2001 (Annexes E1and E3) and paragraphs 419, 430-432, 437-438 and 441-442 of Minutes of Evidence

[14] Submissions of 12 April and 23 May 2001(Annexes C1 and C3) and paragraphs 219, 224-225 and 245-248 of Minutes of Evidence

[15] Submissions of 12 April and 17 May 2001 (Annexes D1 and D3) and paragraphs 287-413 of Minutes of Evidence

[16] Submissions of 21 April and 8 June (Annexes F1 and F3) and paragraphs 549, 552, 574, 581-582, 589, 593 and 615 of Minutes of Evidence

[17] Submissions of 18 April and 6 June (Annexes G1 and G3) and paragraphs 645, 650-653, 661, 771-772 and 775 of Minutes of Evidence

[18] Submissions of 27 March and 11 May (Annexes A1 and A3) and paragraphs 8-10, 20-21, 24, 26, 45, 50-51, 71, 79 and 97-98 of Minutes of Evidence.

[19] Submission of 4 April 2001 (Annex B) and paragraphs 136, 138-141, 146-147, 166 and 170 of Minutes of Evidence

[20] 5 April submission (Annex I1)

[21] Submissions of 16 April and 15 May (Annexes E1 and E3) and paragraphs 422-423, 459, 464-465, 475, 482, 494 and 497-498 of Minutes of Evidence

[22] Submissions of 12 April and 17 May 2001 (Annexes C1 and C3) and paragraphs 223, 228-229, 243-244 and 272-273 of Minutes of Evidence

[23] Submissions of 12 April and 17 May 2001 (Annexes D1 and D3) and paragraphs 287-413 of Minutes of Evidence

[24] Submissions of 21 April and 8 June 2001 (Annexes F1 and F3) and paragraphs 553, 555, 557, 590 and 618 of Minutes of Evidence

[25] Submission of 18 April (Annex G1) and paragraphs 669-670, 690-695, 700 and 725-730 of Minutes of Evidence

[26] Submission of 11 May 2001 (Annex A3) and paragraphs 12-14, 92 and 103 of Minutes of Evidence

[27] Submission of 4 April 2001 and paragraphs 185-188 of Minutes of Evidence

[28] Submission of 5 April 2001 (Annex I1)

[29] Submissions of 16 April, 15 May and 4 June 2001 (Annexes E1, E3 and E4) and paragraphs 418, 425-428, 435-436, 451, 453-454, 463 and 483 of Minutes of Evidence

[30] Submissions of 12 April and 23 May 2001 (Annexes C1 and C3)

[31] Submissions of 12 April and 17 May 2001 (Annexes D1 and D3) and paragraph 346 of Minutes of Evidence

[32] Submissions of 21 April and 8 June 2001 (Annexes F1 and F3) and paragraphs 556 and 617 of Minutes of Evidence

[33] Submissions of 18 April and 6 June (Annexes G1 and G3) and paragraphs 645, 650-653, 661, 771-772 and 775 of Minutes of Evidence

[34] Submissions of 27 March and 11 May 2001 (Annexes A1 and A3) and paragraphs 15 and 118 of Minutes of Evidence

[35] Submission of 4 April 2001 (Annex B)

[36] Submission of 5 April 2001 (Annex I1)

[37] Submissions of 16 April and 15 May (Annexes E1 and E3) and paragraphs 455, 505,520-523 of Minutes of Evidence

[38] Submissions of 12 April and 23 May 2001 (Annexes C1 and C3) and paragraphs 232-235, 256-258, 270 and 278-279 of Minutes of Evidence

[39] Submissions o 12 April and 17 May (Annexes D1 and D3) and paragraphs 351, 357 and 392 of Minutes of Evidence

[40] Launched on 15 December 2000 ISBN no. (Volume 1): 0-33-960019-5 and (Volume 2) 0-33-960020-9

[41] Submission of 2 April 2001 (Annex H)

[42] Launched on 5 July 2000 ISBN no. (Volume 1) 0-33-960000-4 and (Volume 2) 0-33-960001-2