The Northern Ireland Assembly - Minutes of Evidence: Annexes to the Minutes of Evidence

committee for agriculture and rural development
inquiry into the livestock and meat commission

Thank you for your letter of 13 March 2001 seeking the views of the Ulster Farmers' Union on the subjects covered by the Terms of Reference for your Committee's inquiry into certain aspects of the operations of the Livestock and Meat Commission for Northern Ireland. As you will no doubt be aware a Quinquennial review of LMC has recently been carried out by a Steering Group (compiled of DARD and LMC officials) and involving detailed consultation with industry representatives. In May 2000 a preliminary report of the Steering Group's findings was circulated for further comment by industry. At this time the Union submitted a detailed response to the Group's preliminary report within which we outlined our organisations views on many aspects of the LMC portfolio of activities. In order to address the various questions posed in your letter I have enclosed a copy of our response document, which I think should answer most of the issues raised.

I hope this will prove useful as your Committee conducts its inquiry and I would expect that we will be able to appear before the Committee in due course if required.

In response to a DARD Consultation dated 5 May 2000 on the above issue, the Ulster Farmers' Union submitted the following response. This was in addition to comments already provided in a previous submission of 9 March 1999 as part of an initial consultation exercise.

The Union is broadly supportive of the main findings and recommendations of the Steering Group established to conduct the quinquennial review of the LMC. There are, however, a number of fundamental aspects of the report of particular concern to the Union and which should be explored much further before their implementation, if at all. (Where specific items are not addressed in this response the Union accepts the conclusions of the Group.)

· The single major issue raised by livestock producers within the Union's membership when consulted recently on this review, was do they continue to support the operation of LMC and provide funding for its activities accordingly. Following much debate it was ultimately concluded that no other body currently existed within NI that could satisfactorily adopt any of the roles performed by LMC. Several of the core activities of LMC were, however, the focus of severe criticism and the need for rationalisation of these activities was considered paramount.

· Information Services: The provision of all technical information to producers whether in the form of price data and market analysis reports or, whether policy updates, research results or simply informative material, is considered beneficial. However, the current accuracy and delivery of some of this information was deemed very unsatisfactory.

· Regarding the reporting of livestock prices at marts and meat plant premises the reflections given in the "bulletin" and in the media in general, were considered to be widely inaccurate of actual trading conditions. It is the Union's considered opinion that much more in-depth examination of livestock marketing for purposes of price reporting is required. Collation of data for entire daily sales for example, on targeted days at Livestock Marts, would be particularly beneficial to producers especially where store livestock purchasing is concerned.

· With regard to the forecasting of future trading conditions it was again considered that LMC performance in this aspect was very poor, particularly where the sheepmeat market was concerned. It is recognised that the prediction of future trading conditions is very difficult to do accurately. However, the Union considers that deployment of sufficient resources in analysing local and international markets could greatly benefit the entire red meat sector.

· The Union also considers the LMC could play a much more constructive role in the collation and distribution of research results and specific technical information in its newsletter that could assist producers greatly in improving the breeding and marketing of their livestock

· Marketing: It is clearly recognised that a strong promotional body is required to create a high profile for the red meat sector in Northern Ireland. In this regard it is the Union's consideration that LMC performed this function well throughout Europe prior to the onset of the BSE crisis. However, since the BSE crisis and the reconcentration of beef sales on the GB market, producers have been somewhat disillusioned at the performance of LMC in promotion of the quality, diversity and saleability of locally produced beef on the home market. It is clear that much of the work in this area has been undertaken directly by the individual meat processors in recent years. The Union, therefore, recommends much more emphasis is placed in this area given the current dependence on GB multiple trade, until such times as beef export restrictions can be relaxed.

· Much more work in the promotion of Northern Ireland produced lamb is also deemed essential by the Union.

· Regarding the LMC's sister organisation in GB (The Meat and Livestock Commission) the Union would recommend that more clarity in this relationship is made available to producers, given the recent significant financial contribution to MLC from within the LMC budget, for promotional services in GB. Clear definition of this relationship is particularly relevant with recent media reports of widespread dissatisfaction amongst GB producers at the activities of MLC at home and abroad.

· Classification: The classification work of LMC continues to be a major area of frustration to producers given the subjective nature of the exercise. It is, however, still the opinion of the Union that an independent body carries out this service, and that LMC is best placed to continue to do so. The Union recommends that LMC actively engages in the analysis of objective classification trials and progresses the introduction of such systems into Northern Ireland at the earliest possible opportunity.

· One area of particular concern to producers is the operation of the grading appeals procedure in practice. It is the Union's considered opinion that the existing procedure needs to be fundamentally overhauled to make it more 'user friendly' to producers, in order to address all genuine enquiries and concerns both comprehensively and speedily. Recent developments in the methods of hanging carcases in meat plants (Aitch-Bone hanging) have also rendered many appeals practically impossible.

· Funding and Levy Arrangements: The Union recognises that adequate funding of LMC is central to the continued development and enhancement of its range of activities. It is also recognised that some sources of income, in particular that component derived from acting as an agent of the Intervention Board, is likely to significantly decline in the future.

· The issue of levy collection from producers is always a difficult subject to address. In the current financial circumstances in farming circles in the Province, the Union considers that any increase in levies to be collected from producers, at this stage, would be totally unacceptable. The Union does, however, accept the recommendation of the Group that details of the processor levy contribution are finalised and implemented as soon as possible.

· Reviewal of levy payment rates from both producers and processors should be conducted on an annual basis with the full consultation of industry stakeholders, and rates fixed accordingly.

· Regarding the collection of levies from producers it is the Union's considered opinion that levies should continue to be collected only on finished animals at point of slaughter. The Union does not support the introduction of a levy on dropped calves at this stage. Nor does it support the collection of a levy on exports of live animals from the Province. The practical implications of either of these two latter alternatives were considered at some length and dismissed as unworkable.

· FQAS Funding: The funding arrangements for the NI beef and lamb FQAS have been the subject of some intense debate within the Scheme's Technical Advisory Committee (formerly Industry Standing Committee) and, indeed, the Union as a whole. It is the Union's considered opinion that discussions on this issue should continue to be a priority of that Committee, particularly with recent developments in moving the Scheme towards an EN45011 Accreditation standard. In this respect it is crucial that all retail parties accept the standards of the scheme and cut out the huge costs of additional farm audits. The introduction of an annual fee for producer participation in the scheme, which is just one component of a current consultative proposal for its future funding, is contentious and more work on this issue is therefore required.

· Marketing: The Union accepts that the promotion of Northern Ireland beef and lamb is fundamental to the work of LMC. It is the clear determination of the Union's sheep producing members however, that enough resources are not deployed by LMC in the promotion and marketing of the diversity of Northern Ireland lamb and lamb products. It is recognised that levy income generated in the sheepmeat sector is small in comparison with beef levy income. The Union cannot however, support any increase in the levy generated on lamb slaughterings due to the very critical state of the sector at present which is exhibiting a declining trend. No simple answer to this problem of levy income is therefore evident at this stage.

· Size of Commission: The Union continues to recommend that there must be more representation of producers on the Board of the Commission. It is considered essential to have at least three livestock producers on the Commission, two of whom should be nominated by UFU. Not only would an increase in producer membership help to alleviate the concerns of producers as to how budgets are apportioned but could also lead to greater accountability for what are limited financial resources.

· The Steering Group must take into account the overall cost of the Commission membership when determining its size. The Union agrees with the principle of payment to Commission members based on actual attendance at meetings. It also recommends to the Group that procedures are put in place to inform LMC stakeholders of the attendance record of Commission members.

· Management Statement: The Union agrees with the Group that a Management Statement for LMC should be developed which denotes strategic aims and objectives and sets performance targets and monitoring procedures. It is considered, however, that the setting of targets should be monitored very closely in terms of how productive and achievable they would be, and in as cost effective a manner as is possible.

· Review Process: The Ulster Farmers' Union is concerned at the length of time taken between the previous review and this most recent review of LMC NI. It is the Union's firm belief that reviews should be conducted rigorously every 5 years to enable stakeholders the opportunity to appraise LMC performance in each of its activities and to contribute to the enhancement and profile of LMC's work on behalf of the red meat sector.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Thank you for your attendance, with your colleagues, at the meeting of the Committee on 6 April 2001. You will recall that the Chairman stated that the Committee would seek answers to a number of additional questions that could not be covered in the time available.

The questions, some of which were briefly touched on at the meeting, are as follows:

1. In any review or inquiry into the operation of the LMC, what are the key priorities or most pressing issues for the UFU?

2. You have indicated that any increase in levies to the producer will be unacceptable. However, you also welcome the introduction of levy on processors. Do you believe that such a levy on processors can be implemented without being passed on or impacting on the producers?

3. The LMC claim that producer levies have not been increased in 12 years and it may therefore be difficult to argue against some level of increase. Under what circumstances, if any, would an increase on producer levies be acceptable to your members?

4. Do you consider that there is clarity in relation to the overall funding sources of the LMC?

5. What is your understanding of the balance of funding within the LMC between its core funding from DARD and income from its service activities? Is the funding mix acceptable to your members given that funding from one particular source may be used to subsidise another activity?

6. What consultation arrangements would you like to see in place in relation to review mechanisms for levy payment rates?

7. In your paper you recommend the investigation of objective classification trials and the introduction of these systems to Northern Ireland. Do you consider that the introduction of such systems would solve all of the problems inherent in the current system or are there other factors, which need to be addressed?

9. Can you draw on any experience or knowledge of 'best practice' in classification services from elsewhere which might add value to the position in Northern Ireland?

10. Overall, do you consider that your members obtain value for money in relation to the promotional activities undertaken by the LMC? Has any research been undertaken to attempt to 'quantify' the impact of promotional expenditure on your members' business performance?

11. Does the UFU get sufficient opportunity to provide input on the promotional plans of the LMC? If not, how might this be improved?

12. Who do you consider benefits the most from LMC promotional work: the producer, the processor or the retailer?

13. What does the UFU consider to be the main strengths and weakness of current promotional activity undertaken by the LMC?

14. Does the UFU envisage any new market opportunities, which could be exploited by future LMC promotional work? In contrast, are there any market threats, which should be proactively tackled by the LMC's promotional activities?

15. We note from your paper your assertion that there should be a greater representation of producers on the Commission. What is your overall impression of how the Department makes appointments to the LMC?

16. In the past, what has been the role and position of the UFU in respect of appointments to the LMC? How would you like to see this role developing or changing?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

committee for agriculture and rural development
inquiry into the livestock and meat commission

Thank you for your letter of 13 April 2001, which sought answers to a series of supplemental questions relating to the Committee's Inquiry into Certain Aspects of the LMC. Further to our comprehensive discussions with the Agriculture Committee on 6 April 2001 we have attempted to answer your additional questions as fully as possible. Each question will be dealt with in turn:

1. In any review or inquiry into the operation of the LMC, what are the key priorities or most pressing issues for the UFU?

In the review of LMC operations the Ulster Farmers' Union's main priority has been to ensure that an independent and accountable body continues to operate in as efficient and streamlined a capacity as is possible to carry out the varied portfolio of activities that is required by the red meat industry in the Province. 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 in the LMC is accommodated to give proper accountability at ground level on direction of LMC activities.

The introduction of a voluntary processor levy has since July 2000 been collected by LMC. The Union continues to support the collection of levies from processors for funding of LMC. Regarding whether or not this would be passed back or have an impact on producers this is difficult to gauge. It could be said that the only revenue stream available to processors comes from raw material initially supplied by producers so the same principle applies for all other costs related to meat processing.

Producer levies in any shape or form are by their nature always going to be contentious, however the red meat sector in the Province does have a need for the various activities which are currently performed by LMC. Given the increasingly challenging market places in which the local beef and sheep sectors must compete the resources required to capitalise on and indeed develop new market opportunities are likely to grow. For this reason it is important that levy rates are kept under constant review and amended as necessary, with full co-operation of all sectoral participants, if circumstances dictate. If levy rates in Northern Ireland are compared with other regions of the UK (eg MLC levies) then the resource issue falls into context.

4. Do you consider that there is clarity in relation to the overall funding sources of the LMC?

Yes, the Ulster Farmers' Union would be reasonably satisfied with the openness of LMC with regard to its funding sources. These mainly comprise producer and processor returns, income from acting as agents for outside organisations (eg Intervention Board), and carrying out work on behalf of private sector clients. Specific details of LMC income and expenditure are published each year in their annual report and accounts which is freely available on request.

The Ulster Farmers' Union was not aware that LMC had any core funding from DARD. Regarding the funding mix it is inevitable that each component of income may not necessarily always be used for the same purpose. For example surplus income from the provision of classification services has in the past been used to subsidise the operation of Farm Quality Assurance Schemes. Monies available for lamb promotion would be fairly limited if that activity was curtailed to levy income generated from sheep alone.

6. What consultation arrangements would you like to see in place in relation to review mechanisms for levy payment rates?

The current system of carcase classification based on subjective application of the EUROP grid has undoubtedly given much cause for concern amongst producers and clearly an alternative mechanism needs to be found for grading carcases on which payments can be based. Trials on objective classification have been performed in the Republic of Ireland recently at some expense and with a limited degree of success - the automated systems which were used in the trials were developed for much leaner animals than those typically found in UK or RoI and as a result showed up some unacceptable biases for fat class and conformation scores (results for prediction of carcase meat yields were more encouraging). Much more development work is therefore required. A further alternative to subjective classification which could merit some further investigation and development is that of the Meat Standards Australia Total Quality Management System - under this system beef is graded according to eating quality to the consumer through analysing critical control points in the production, processing and value added sectors.

8. What are your general thoughts on the skills of LMC classification staff?

LMC classification staff are trained professionally for the role which they perform. Monitoring of their performance is undertaken by senior LMC field staff, who are in turn monitored by DARD, who are in turn monitored by European Union inspectors to make sure that the EUROP grid is being properly administered in the Province.

9. Can you draw on any experience or knowledge of "best practice" in classification services from elsewhere which might add value to the position in Northern Ireland?

It is the Ulster Farmers' Union's understanding that regular comparisons between graders in Northern Ireland relative to those in Great Britain and RoI are undertaken to ensure standards are similarly applied, in addition to those checks which are carried out by DARD and EU inspectors.

10. Overall, do you consider that your members obtain value for money in relation to the promotional activities undertaken by the LMC? Has any research been undertaken to attempt to "quantify" the impact of promotional expenditure on your members' business performance?

Measurements of benefits arising out of any organisation's promotional activities would be extremely difficult to quantify. Regarding the promotional activities of LMC for beef and lamb there are considerable constraints limiting these activities. Firstly as far as beef is concerned the only market available, due to BSE export restrictions, is the UK and therefore a significant proportion of the LMC beef budget is channelled via MLC for promotional services in Great Britain. Regarding the promotion of Northern Ireland sheepmeat the budget obtained from sheep slaughterings in the Province is limited and this tends to have a knock-on effect on the promotional capacity for sheepmeat.

11. Does the UFU get sufficient opportunity to provide input on the promotional plans of the LMC? If not, how might this be improved?

The promotional plans of the LMC are largely determined at board level and as such the Ulster Farmers' Union has no direct input.

12. Who do you consider benefits the most from LMC promotional work: the producer, the processor or the retailer?

Any promotional work that enhances the image and sales of Northern Ireland beef and lamb is likely to benefit all parties concerned.

13. What does the UFU consider to be the main strengths and weakness of current promotional activity undertaken by the LMC?

The main weakness of current promotional activity is undoubtedly the inability to export beef or beef products outside the UK marketplace. On the positive side the relationship of LMC with its counterpart in Great Britain (MLC) has helped to facilitate the tremendous growth of Northern Ireland beef in the British market.

The main market threat to Northern Ireland's beef and lamb producers is undoubtedly the globalisation of the food industry. With producers representing the lowest link in the food supply chain the growing competitive pressures coming from overseas food imports, currency differentials, demand for cheaper and cheaper food all have untold effects on local farm production. The threat of globalisation is all too real when the effects of the current Foot and Mouth disease outbreak are considered. Regarding the exploitation of new market opportunities it will be imperative that bodies such as LMC continue to seek out new 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.

The Ulster Farmers' Union continues to support an increase in representation of producers on the board of LMC. Our understanding on the procedures for making appointments to the board of LMC are fairly rigorous with the ultimate responsibility now resting with the NI Minister for Agriculture and Rural Development.

16. In the past, what has been the role and position of the UFU in respect of appointments to the LMC? How would you like to see this role developing or changing?

In the past the Ulster Farmers' Union has undertaken to nominate producers to serve on the board of LMC. Current appointments to the board are only made following advertisements in the press, short-listing and interview of potential candidates and selection on the basis of merits. If changes to the structure of the board are to be made in the future the Ulster Farmers' Union 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.

I trust these answers to your questions will prove useful as you continue with your inquiry.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Thank you for the opportunity to provide a collective view from NIAPA on your inquiry into certain aspects of the operation of LMC (NI), and I would wish to accept your invitation to provide a written response and also the opportunity to provide a formal response in person to the Committee on Friday 6th April 2001 at 12.15pm. Due to the fact that I am currently a Board Member of the LMC Commission, appointed by the late Baroness Denton for a three year period and re-appointed for a three year period by Minister Brid Rodgers MLA, and in order that there is not a conflict of interest, I have requested the NIAPA Executive to individually answer the questions posed by your Inquiry and the accompanying document, in relation to Livestock & Meat Commission, is a product of this consultation.

As the LMC have been also requested to participate in the inquiry, I would consider it appropriate that I would not appear personally to the Committee on Friday 6th April at 12.15pm, a view which has been endorsed by the NIAPA Executive. The representatives selected by the Executive of NIAPA to attend are Nigel McLaughlin Vice-Chairman, Vincent Boyle Vice-Chairman and Oliver Cunningham, County Down Chairman.

Trusting that you find the information provided acceptable to your inquiry. If you require further information or indeed clarification, please do not hesitate to contact me.

The LMC (NI) was founded by statute in 1967, charged with responsibility for the provision of services to the Northern Ireland beef and sheep meat industry and with advising Government on matters relating to the sector. The LMC acts as a system for adding value to the red meat industry's activities through the acquisition, allocation and commitment of resources and drawing on a network of relationships between contributing participants.

"LMC will endeavour to maximise the return to the Northern Ireland economy from its beef and sheep meat industries, through the provision of quality services to aid and support producers, processors, retailers and consumers and through the creation and implementation of appropriate strategic marketing initiatives in premium and niche markets".

An increase in levy at this time may be the proper thing to do and NIAPA accept that, in principle, the industry requires to ready itself for increased exports i.e. to regions outside Northern Ireland (primarily GB in the short term, and then the European Market whenever export status is achieved). The timing of this needed increase (not substantial) in levies is inappropriate given that farmers do not wish to pay additional funds whenever incomes are virtually zero. We fully understand the requirement to raise the levy and believe that the inequitable distribution of margins in the red-meat sector (NI) have lead to this problem of an under-resourced Livestock & Meat Commission (LMC). Farmers expectations for the output received from LMC will need to be met before an increase could be agreed upon. The suspicions by farmers that processors are gaining, and have consistently gained, large profits from the sector without providing funding to LMC (before July 2000) make the situation unbalanced to request further funds from producers. Government need to ensure, by whatever means, that imported red-meat is prevented from entering Northern Ireland (raise animal health standards etc.) otherwise an increased levy on local producers to further fund LMC against a backdrop of increasing imported product would be ridiculous.

We would not anticipate a yearly review process, however a three year period would reflect a more balanced analysis, as environmental and economic factors may reflect upon market performance over a 2-3 year period. The review would be on the basis that need for the levy was identified by the industry.

During 2000, following the pickets placed on meat plants in January, NIAPA entered into dialogue with the processors to ensure that the industry began to discuss issues of commonality and as a result the major processors in Northern Ireland agreed to a voluntary levy (from July 2000) which equates to the levy provided annually by producers. The contribution is welcomed by NIAPA and we believe that efforts are being made by LMC and DARD to introduce legalisation to bring statutory effect to this processor levy as soon as possible.

4. Is it possible to raise a levy on processors which is not passed back to the primary producer?

There is no contribution from the processors which does not emanate from the efforts of the primary producer, whether it be an increase in wages to factory workers, rates, electricity or a financial amount to LMC. The reality of the situation is that LMC was funded in 1967 and the processors had made no contribution to LMC, until July 2000, and the important factor in developing Northern Ireland's red-meat industry is to involve the processors in paying an equitable amount towards the regions market opportunities.

The LMC is funded by levies (statutory) since 1967 on all cattle and sheep slaughtered in Northern Ireland, the classification fee for grading of cattle and sheep and other services to IBEA, and Farm Quality Assured Scheme (FQAS) contribution from farmers. Other revenue is received through a European Quality Beef (EQB) Initiative and government funding as a result of the BSE crisis (1995) to present, although this is allocated through liaison with the Red Meat Strategy. Some funds from Peace & Reconciliation have also been allocated recently to assist with the Red Meat Strategy and this is also apportioned by LMC, however it must be realised that government provide no core funding even though the LMC is a Non-Departmental Public Body (NDPB).

NIAPA believe that an unfair burden is being placed and targeted at those (producers) who can ill afford to contribute at this point in time and that the processors should be assisting the LMC to a greater extent, perhaps through a windfall tax procedure (a mechanism to be agreed between producers, processors, LMC and DARD) which should be a graduated (tiered) basis commensurate with profitability. This would effectively realise the consensus of opinion currently available that a greater equality of contribution should be achieved in the industry (reference Tony Blair statement) about the "armlock which retailers etc." have on the industry and specifically comments by Minister Rodgers at the opening of Lissue House last year.

Services provided by LMC are needed and have to be provided to allow the industry to perform and achieve satisfaction, particularly market information and classification. There should however be a situation whereby LMC should be held to account for the services they provide to the industry and the issue about farmer participation at Board level is crucial to receive industry support (see item 20).

8. What is the level of satisfaction amongst NIAPA members with regard to the services being provided by LMC?

Farmers believe grading (classification) is getting tighter each year, yet they consistently spend more resources on improving breeding, to no avail. It appears that there may be a case of seasonal grading being provided, in that, grades are much harder to achieve in an oversupplying situation. The consistency of the service is problematic.

Because classification relates to the pricing policy conducted by meat plants then farmers invariably blame LMC for pricing. Need to change the pricing payment structure by plants.

There still remains the problem that FQAS cattle are not being given a premium, therefore by having no quality assured, then farmers would be no worse off at the moment. This needs to be resolved and NIAPA have been involved in discussions with the industry to resolve this situation. The reporting of historical processor payments and indeed what the processors deem themselves to be able to pay, should be changed to what LMC anticipate the market place to be capable of paying and particularly (item 10) the proper analysis of pricing differential between regions of the UK. Also (item 11) the subjective analysis by graders is a problem.

10. Have you any information to allow comparison with the grading service offered in GB and in Republic of Ireland?

According to Irish Farmers Journal, recently, the percentage of higher grades for EU classification is 50% higher in Republic of Ireland than in Northern Ireland. Why have we similar rules for Republic of Ireland yet a more farmer friendly atmosphere? Although prices compared in GB with Northern Ireland are not measured in a comparable way (Northern Ireland has full reporting whilst GB are only a sample) most of the evidence is anecdotal and therefore is useful to relate. NIAPA believe there needs to be a comparison by LMC developed with producers and processors which is fair and equitable and equally understood by all. LMC quoting the top grade price by factories (this has recently changed) is not an acceptable system, there should be a pricing bulletin which equates to the most common grade i.e. 0+3.

This would be desirable, but it would need to be able to be positively demonstrated to provide a more uniform product (grading) and not be able to be tampered with. A pilot exercise in Northern Ireland would be a good first step to examine its capability. Associated with this should be the ability of LMC agricultural department to initiate more live grading demonstrations so farmers would have a better grasp of both live and slaughter carcase information.

12. What are your comments on the capabilities of staff employed by LMC to provide classification?

The consistency of the service provided by LMC personnel is important therefore the procedures put into place from the Chief Executive down to graders is a crucial element in obtaining a consistent classification system. The staff employed by LMC to provide classification are all experienced and capable people, however the problems over graders arise whenever the efficiency is less than adequate. This is a management role and should be identified as so, and the human variability is evident in all employment situations.

13. What recommendations could you make on any shortcomings perceived within LMC classification?

A proper appeals system i.e. one that is treated properly, as there can sometimes be peer pressure on the overseeing appeals grader to stand by the original grade, again this comes down to the human variability and the requirement to have proper management procedures in place. NIAPA believe that the influence of the Holstein cattle into beef production plays a large part in the lesser grades being obtained and too great a variation in grades also provides confusion. It would be more acceptable to have less grades, for processors to pay a larger amount towards the higher grades (U Grade and R Grade) as this would better reflect the returns to farmers who are producing what the market place requires. This has been advocated by NIAPA for some time.

14. Can you confirm whether or not NIAPA plays an active role in LMC's activities in this area (Promotional activities)?

The presence of NIAPA members on the Board of Commissioners, the liaison committees, FQAS/NIFCC boards, Technical Advisory Committees and the constant contact and relationship with the Agricultural and Classification sections are evidence of a role in LMC. To what extent NIAPA play a role in promotional activities, outwith comments above, is unclear. NIAPA certainly believes that it exerts influence on LMC promotional activities.

15. Can you give an assessment on the value for money achieved by expenditure in this area (Promotional activities)?

In the absence of quantitative data, NIAPA can only speculate, aspirationally and anecdotally, and opinions arrived at through collective discussion. We believe that promotions need to be sustained, particularly at point of sale, and that education and schools should also play a role in marketing Northern Ireland products. The LMC already utilises MLC expertise and documentation/publications which we believe to be an effective rate for value for money however we believe that modern promotions may not always address the present consumers and that there needs to be a balance between more short term output and the longer time frame promotions allocated to the younger generation. A suggestion is that NIAPA as with other organisations concerned in the Northern Ireland industry should be used to impress upon the local population as to the attributes of Northern Ireland lamb and beef and that peer pressure at the local level could increase consumption.

16. Has NIAPA made any assessment of the direct benefits to producers of this activity (Promotional activity)?

The Greenfields brand (prior to 1996) was stated to have had a considerable input on consumption with Dutch customers, yet unless quantitative data is available then an informed opinion is not able to be provided. The best direct benefit to a producer from the industry in increased return from the product produced.

17. Has NIAPA assessed the balance of benefits between the producer and the processor (Promotional activity)?

The historical information is that the processor appears to be the largest benefactor and can benefit quickly in comparison to the producer. The farmer has a long lead in time, probably a three year period, and this time factor does not allow the same versatility of management decisions which processors and retailers enjoy. Perhaps the promotional activity should be managed more closely by farmer representatives on LMC than processors as the benefits to accrue need to have a long-term return rather than the processors quick return. If any levy was increased this would be NIAPAs stance in the future, a two tiered responsibility for management of LMC.

18. Are you satisfied with the current composition of the LMC Board as being representative of the agri-food industry?

NIAPA believe that there is a good mix on the Board of LMC however an increase in members from seven members to nine would be preferable. This expansion should be recruited in line with recent (post 1995) procedures (adherence to Nolan Principles), and be people who should be fully conversant with the agricultural industry aspects, and have personal skills, expertise, experience and knowledge that would allow them to take an industry view rather than a sectoral view. We do not believe that particular associations, groupings or unions should necessarily have exclusivity however commissioners should be able to have general industry endorsement. LMC should however continue to only represent the red-meat sector and not be diverted from its important task by taking on new responsibilities for other species.

NIAPA have never been involved in the appointments process. The appointments process, since 1996, has been dramatically changed for the better and NIAPA will at all times be available for comment in the process.

20. Has NIAPA any comments to make on a possible recommendation to increase the size of the LMC Board from seven to nine persons?

NIAPA believe that the Commissioners should be increased to nine with a minimum of four farmers directly involved in the agricultural industry.

NIAPA trust that the comments provided will be useful to the Committee, however if there is a requirement for further information, or clarification we would be willing to provide this.

committee for agriculture and rural development
Inquiry into the livestock and meat commission

Thank you for your letter of 13 March indicating that you were instigating an inquiry into the Livestock and Meat Commission and seeking my views on certain aspects of the operation of the LMC.

It has since been agreed that the LMC will be one of the issues covered when I attend the Committee on 27 April. In the meantime I enclose a Memorandum responding to the specific issues raised in your letter. A copy of the report of the Quinquennial Review of the LMC has been appended to the Memorandum.

1. The letter of 13 March from the Chairman of the Committee sought comments on a number of aspects of the operation of the Livestock and Meat Commission.

2. Attached is a copy of the report of the Quinquennial Review of the LMC which was finalised during the period of Assembly suspension last year. While this covers all aspects of the LMC operational activities information is supplied below in respect of particular issues raised in the 13 March letter.

3. The Department is supportive of the need for increased funding for the LMC as indicated in the Quinquennial Review Report. Processors have agreed to provide funding on a voluntary basis pending this being made a statutory requirement. Consultation is taking place on the subordinate legislation to give effect to this and to an increase in the maximum levy. While this can be achieved by subordinate legislation there may be a need for primary legislation to extend the scope of levy collection beyond producers and primary processors.

4. The Department does not provide core funding to the LMC. However, funding has provided on occasions related to specific programmes or projects. For example, £2m was provided by the Department to the LMC for implementation of the red meat strategy on behalf of the industry, while previously £250,000 was provided for red meat marketing support in the aftermath of the BSE export ban in 1996.

5. The LMC has certain statutory duties to perform. Over the years the LMC has carried out functions related to the industry including operation of beef intervention arrangements on behalf of IBEA the revenue from which has assisted the LMC to exercise its statutory functions despite a relatively low income from the producer levy. This has been accepted by all parts of the industry as being beneficial. Without this additional source of revenue the LMC would not have been able to sustain activities such as the Farm Quality Assurance Scheme unless there had been a significant increase in industry funding.

6. 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 respect of cattle and on meat colour and fat class in respect of sheep.

7. The classification of cattle and sheep in Northern Ireland is carried out under a formal contract between LMC and meat plants. LMC officers are licensed by the Department to undertake classification. These staff undergo training before taking 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.

8. 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 to ensure that standards were being followed correctly. One outcome of this review was that in marginal cases producers were to be given the benefit of the doubt. Subsequently monitoring by DARD and IBEA technical inspectors has ensured that the EU standards are being properly applied. A further EU inspection visit in November 1998 confirmed this and a copy of the report of that visit is attached.

9. Carcase classification is essentially a subjective judgement and while every effort is made to ensure consistency of approach it is recognised that there can be disputes from producers who are concerned about the effect on their returns. Appeal arrangements allow producers to have a classification decision review by a senior member of LMC classification staff. However, the Department has no evidence to suggest that classifiers are being influenced by processing plant management.

10. The Department is aware that the classification system is being properly applied in GB by the close relationship of DARD technical inspectorate and their GB colleagues. There is also involvement in UK-wide IBEA standardisation exercises. The Department has no specific knowledge of the application of classification standards in the Republic of Ireland other than that the EU also inspects and is satisfied with classification standards there.

11. The Department is aware of developments in relation to 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 on such a system are being closely monitored.

12. The Department'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 strategic plan which is agreed with the Department prior to being adopted by the Commission. The strategic plan sets out the main objectives of the Commission and how it is proposed to meet these. Where public funds have been provided to support marketing or promotional activities the LMC submits to the Department specific proposals for approval. A condition of that approval normally is that a report is provided on the extent to which the programme has successfully met the set objectives. Promotional activities undertaken on behalf of the industry as a whole and the evaluation of these would not distinguish between the benefits to the different parts of the beef supply chain. It is doubtful whether such benefit could be separately identified. In any case the fact that processors do pay now a levy contribution to the LMC means that they are contributing to LMC promotional activities.

13. Appointments 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.

Regarding the most recent appointment in accordance with the Nolan procedures the Department:-

· By writing to industry organisations with an interest in the activities of the LMC, the General Consumer Council for Northern Ireland and the Health Promotion Agency; and

· By drawing on the current list of available people held by the Central Appointments Unit.

(b) Assessed candidates on merit by means of a panel which included independent representation.

Reappointments 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.

report of a quinquennial review of the livestock and meat commission for northern ireland

report of a quinquennial review of the livestock and
meat commission for northern ireland

1.1 Government Departments which sponsor Non-Departmental Public Bodies (NDPBs) are required to carry out a periodic comprehensive review of each NDPB at least every five years. The last review of the then Livestock Marketing Commission for Northern Ireland took place in 1989.

1.2 Reviews of NDPBs involve a rigorous test of a wide range of options for the future delivery of functions including abolition, privatisation and contracting-out as well as continuation as a NDPB. The potential for merging bodies or transferring functions between them are further considerations in the review process. In addition specific issues of relevance to the efficient operation of the body in question are examined.

1.3 This review of The Livestock and Meat Commission for Northern Ireland (LMC) was conducted by officials from The Department of Agriculture for Northern Ireland (DANI) under a Steering Group comprising the heads of the relevant policy and finance divisions within DANI and the Chief Executive of LMC. The review was conducted in accordance with the guidelines for the review of NDPBs recommended by the Cabinet Office and HM Treasury. Paragraph 2.4 contains the Terms of Reference for the review.

1.4 The review process began with a consultation exercise in which interested organisations were asked for views on LMC. In addition, a Press Release was published widely inviting comments from anyone who wished to contribute to the review. Each Commission member was interviewed as well as the Chief Executive and the manager of each functional area within the Commission staff.

1.5 Follow up interviews were held with The Ulster Farmers' Union (UFU), The Northern Ireland Agricultural Producers' Association (NIAPA), The Northern Ireland Meat Exporters' Association (NIMEA) and The Ulster Agricultural Organisation Society (UAOS) who had responded to the initial consultation document.

1.6 LMC was established by the Livestock Marketing Commission Act (Northern Ireland) 1967 for the benefit of the livestock and livestock products industries in Northern Ireland. The non-executive Chairman and six non-executive Commissioners are appointed by the Northern Ireland Agriculture Minister in accordance with the guidelines issued by the Commissioner for Public Appointments for Northern Ireland. Commissioners normally serve a 3-year term with the possibility of reappointment for a further term.

1.7 LMC has the general duty of examining and recommending improvements in the marketing of livestock and livestock products and the particular functions set out in Annex 1. Chapter 4 of this Report contains a more detailed account of LMC activities.

1.8 LMC's core funding is derived from a statutory levy paid by producers on cattle and sheep slaughtered in Northern Ireland. In the 1998/99 accounting year the levy generated 16% of the Commission's £2.46m gross income from activities. Activities carried out by LMC as agent of The Intervention Board (IB) realised 58% of its income while the remaining 26% was generated by the carcase classification service provided by the Commission at all Northern Ireland cattle and sheep slaughter plants. LMC also benefits from partial reimbursement of expenses incurred on generic beef promotion activities under the European Quality Beef Promotion Programme.

1.9 Overall policy is set by the Commissioners. The running of the organisation in accordance with statutory requirements is delegated to the Chief Executive, who is also the Accounting Officer. The managers of six functional areas - Information Services, Marketing, Agricultural Services, Field Services, Accounting and Secretarial - report to the Chief Executive. A Strategic Plan, produced by management and approved by the Commissioners, is the main vehicle through which policy is implemented.

1.10 Producer and processor organisations strongly endorsed the need to have the red meat marketing function concentrated in a body such as LMC as the industry endeavours to recover from the effects of the beef ban imposed following the March 1996 BSE crisis. LMC has a crucial role to play in the delivery of DANI's aim "To improve the economic performance of the agri-food.sector" and has been charged with a pivotal role in co-ordinating the delivery of the Red Meat Strategy.

1.11 A few individual producers failed to see any benefit in LMC's activities, primarily because of a perceived absence of a tangible return for their levy payments.

1.12 Abolition of LMC would send a very negative message to the industry given the generally supportive response to the consultation and would run contrary to the views of the producer and processor organisations. The Group concludes therefore that the clear balance of opinion is for LMC to continue.

1.13 With the exception of one producer group, the clear message from all organisations was that LMC should remain in the public sector with the legislative power to collect levies. It was acknowledged that a voluntary scheme would be unworkable due to the difficulties in collecting levies.

1.14 Producer organisations welcome LMC's NDPB status as somewhat removed, but not divorced from Government while also independent of the meat plants. Its status has also been perceived to have advantage in opening new markets and in accessing funding from, for example, the European Quality Beef Promotion Programme.

1.15 From Government's point of view a public body is preferable in relation to the delivery of its aim to promote the agri-food sector and implement the Red Meat Strategy which has received substantial Government support. The Group recommends that LMC continues as a NDPB.

1.16 LMC's NDPB status provides a bridge between Government and the industry. It serves both the aims of Government and the industry and in doing so is subject to strong public and market disciplines.

1.17 The hoped for recovery in export markets remains delicately poised following some further future easing of the beef export ban, and the industry needs to consolidate its position and work together to move forward. Given the need to secure a sound financial base on which to build the recovery of the industry NDPB status is essential to enable the levy to remain on a statutory basis. The Group concludes that LMC's activities are essential to the future development of the Northern Ireland red meat industry and are best delivered through the framework of a NDPB.

1.18 The "commercial" work undertaken by LMC as agent of IB has provided a vital source of income in recent years. The medium term prospect however is for much reduced LMC activity and a consequent reduction in revenue in its agency role. This reduced earning potential would make the provision of these services less attractive to the private sector.

1.19 In addition, there is a high level of interdependency among many LMC activities. Fragmentation of these services would carry the risk of "cherry picking" and could lead to difficulties within the industry if the present integrated suite of LMC services was to be sourced from a range of service providers.

1.20 Given the current uncertainty regarding export potential following some easing of the beef export ban, this is not considered the appropriate time to introduce further uncertainty and possible fragmentation by recommending the privatisation or contracting out of any LMC functions. The Group concludes that none of the activities currently performed by LMC is appropriate for contracting out or market testing at the present time. The Commission should however continue to monitor industry developments with a view to assessing the potential for achieving better value for money through alternative arrangements.

1.21 Outside of Government there is no other organisation within Northern Ireland with a sufficiently broad remit to subsume LMC's range of activities. In UK terms LMC's activities could be merged with those of The Meat and Livestock Commission (MLC) and run on similar lines to the MLC Scottish Forum or MLC Welsh Council.

1.22 Such a move has no obvious benefits but numerous disadvantages given the geographical separation of the regions, the different levy arrangements and the reservations Northern Ireland producers and processors would have about contributing to a UK wide levy.

1.23 The recent quinquennial review of MLC considered the transfer of responsibility for export promotion to Food From Britain (FFB) but concluded that the function should remain with MLC who have the required specialist knowledge of and contacts in the red meat sector. Similar considerations apply to LMC's export promotion activities. The Group concludes that there is no scope to merge LMC with any other organisation.

1.24 While the processors' organisation expressed some merit in having one body with overall responsibility for promotion of Northern Ireland meat, no convincing arguments were advanced in support of such a move. Neither producer organisation was in favour.

1.25 Given the Pork and Bacon Forum's promotional role in Northern Ireland and MLC's activities in Great Britain (which is the main market for pigmeat from Northern Ireland), it is difficult to see what benefit would be derived from extending LMC's remit to include pork. The Group recommends that LMC's remit should not be extended to include responsibility for pigmeat promotion.

1.26 There is a clear need for an increase in LMC funding to finance the necessary development of the red meat sector and to facilitate the substantial marketing and promotional activity required to enable the industry to recover from the beef export ban. While funding from Government, LMC and processors will be available under the Red Meat Strategy for an initial three-year period, increased levy funding is essential to provide a sound financial base.

1.27 LMC has reached agreement in principle for the introduction of a processors' levy and intend to pursue an increase in the producers' levy which, in the Commission's judgement, can be delayed until April 2001. The Group recommends that negotiations to finalise details of the processor levy arrangements are concluded as soon as possible and consultations continued to increase the producer levy to an equitable level vis-à-vis the position in GB.

1.28 It is further recommended that levy rates should be reviewed annually by the Commission in consultation with producer and processor organisations.

1.29 It was noted that the Commission intends to explore the potential for generating income in respect of dropped calves. Since LMC services benefit the entire industry it is inequitable that only the beef finisher and not the calf producer contributes to LMC funding by way of levy. The Group recommends that the Commission should endeavour to complete its examination of this matter so that any legislative implications can be considered in parallel with other legislative amendments arising out of the review.

1.30 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.

1.31 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.

1.32 The Group noted the difficulties involved in ensuring that a levy was collected in respect of animals other than simply at slaughter. The Group endorses LMC's decision to seek to extend the scope of levy collection and recommends that the Commission considers how the difficulties involved in applying a levy to live exports of all cattle (once live exports resume) and sheep from Northern Ireland could be overcome. Apart from the financial benefit accruing to LMC, this would mean that producers who pay levy on their livestock slaughtered in Northern Ireland would no longer be disadvantaged compared to those who export their animals and do not pay levy.

1.33 Increasing membership and associated administration, inspection and audit costs has placed a considerable strain on FQAS funding which is supplemented by the surplus funds generated by the operation of the carcase classification service. While the Commission intends to review charges in the long term, the Group recommends that the Commission refers the matter to the Industry Standing Committee for early review and that the Commission considers the introduction of an annual fee for continued membership of the Scheme.

1.34 There was general support for LMC's role as leader of the generic promotion of Northern Ireland beef and lamb. Producer responses indicated a desire for increased lamb marketing and more liaison with producer and marketing co-operative bodies. Expenditure on lamb marketing already significantly exceeds levy income generated on slaughterings, further reinforcing the need for a levy increase to fund lamb promotion.

1.35 The Commission is currently engaged in the development of a contractual arrangement with MLC which is expected to assist LMC in developing its marketing strategy and provide access to MLC expertise and promotional material. In addition LMC will avail of MLC's Brussels based office accommodation and facilities.

1.36 The Group recommends that the Commission, in furthering its export marketing activities, should continue to liaise with FFB on behalf of Northern Ireland companies seeking to export and develop speciality red meat products.

1.37 Some consultation responses recommended that red meat marketing should become a responsibility of an overall food promotion body similar to An Bord Bia in the Republic of Ireland. While individual Commissioners had differing views on the proposal, the majority were opposed mainly because of the risk that funding for red meat promotion could be diluted within such a body

1.38 LMC has a specific and well defined role in the generic promotion of Northern Ireland red meat. One of the issues raised during the development of the Strategy 2010 document was the need for an overall Northern Ireland food marketing body. The Group recommends that LMC should participate fully in any consideration which is given to the establishment of such a body.

1.39 Consultation responses were overwhelmingly in favour of carcase classification being carried out by an independent body. LMC's NDPB status is a significant advantage, identifying it as independent of the meat plants. Classification arrangements in GB and ROI were considered in discussion with producer and processor organisations in an attempt to devise alternative arrangements in Northern Ireland. However, no satisfactory alternative system was identified. Despite the criticisms levelled at 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.

1.40 LMC are currently monitoring prototype objective classification systems being tested in the Republic of Ireland. In addition to removing the subjectivity of the present arrangements, objective classification may facilitate revised payment arrangements based on the meat yield of the carcase. In addition to the significant capital investment involved with such systems, EU approval will be required before their introduction on a commercial scale. The Group recommends the continuation of the existing classification arrangements at the present time but LMC should continue to monitor developments on objective classification with a view to the eventual introduction of objective classification procedures in Northern Ireland.

1.41 There is general agreement that the Commission should be enlarged from 7 to 9 members in order to expand the range of skills and experience available and to share the workload involved with membership. However, industry interests favour an increase in the representation of their respective sectors to counter what each perceives to be an imbalance on the present Commission.

(i) the number of Commission members be increased to nine in order to broaden the scope of the business experience and expertise available to the Commission and to provide a greater measure of flexibility for members;

(ii) the likely time commitments of membership should be made clear when advertising for new members and the importance of meeting these commitments should be clearly spelled out to newly appointed members;

(iii) the Department should consider the merits of a change from the present annual payment arrangement to payment on a daily basis linked to attendance at commission meetings;

(iv) the Chairman's assessment of a member's attendance and contribution to Commission meetings should be an important factor when the re-appointment of members is under consideration.

1.43 A small number of responses from producers indicated a perception that producers generally have not been kept sufficiently informed of LMC activities on behalf of the Northern Ireland red meat industry. In addition, producers tend to feel penalised by LMC through its role in carcase classification.

1.44 The weekly Bulletin has traditionally been LMC's main method of communicating with producers. Producers generally welcome this publication but some feel that its presentation of price data tends to "talk down" prices. A similar criticism was levelled by some at the LMC's slot on the Friday "Farm Gate" radio programme although responses on the Commission's media image were generally favourable.

1.45 The Commission recognised the need to improve its profile among the farming public and to better inform them about its activities and responsibilities. The series of producer meetings conducted by the Commission over the last two years have been very well received and were commented on favourably during the review. The Commission intend to maintain an annual schedule of such meetings.

1.46 The review identified scope for LMC to assist producer groups including UAOS in understanding the role of LMC. The Group recommends that the Commission should continue its more proactive approach in conducting meetings with producer groups.

1.47 Individual Commissioners reported satisfactory relationships with DANI but felt a greater degree of autonomy would enable the Commission to perform more effectively in the commercial environment in which it operates.

1.48 Government guidelines, which encourage the delegation of responsibility within an agreed policy framework, require the terms and conditions under which a NDPB operates to be set out formally in a Management Statement. The Group recommends that the relationship between LMC and DANI be formalised and set out in a Management Statement and an accompanying Financial Memorandum.

1.49 The Group recommends that at a convenient time it would be appropriate for the statutory functions of LMC to be restated in the light of the current industry structure.

1.50 The quinquennial review of a NDPB normally includes a review of the system of financial management and control within the body. However, existing arrangements provide for the review of LMC's system of internal control by DANI's Internal Audit Division. An audit review was carried out in May 1999 and a further examination of these aspects as part of this review is therefore considered unnecessary.

1.51 Government guidelines require the terms and conditions under which each NDPB operates and the arrangements for setting its performance targets and measurement to be recorded formally in a Management Statement. Such measures should seek to demonstrate that LMC is endeavouring to obtain best possible value for money. The Group concludes that a Management Statement should be developed in consultation with DANI and should include DANI's responsibilities in agreeing strategic aims and objectives for LMC, together with performance targets and procedures for monitoring performance. The accompanying Memorandum should also document the responsibilities and financial duties of Commission members and the Chief Executive and include details of delegated financial controls and authorities.

1.52 The Group recommends hat LMC's Strategic Plan should include, in addition to the aims and objectives of the various functional areas, performance targets against which actual performance can be measured. These performance targets should cascade downwards from the Strategic Plan into individual Business Plans for the various functional areas. Actual performance against the targets should be measured regularly and reported on within the Commission's Annual Report.

1.53 Government guidelines place a responsibility on NDPBs to implement Government policy in areas such as the Citizens' Charter (now renamed Service First - the new charter programme) and the application of Open Government principles laid down in the Code of Practice on Access to Government Information. In addition each NDPB is required to maintain a register of Board Members' interests in accordance with the Code of Best Practice for Board Members of Public Bodies. The Group recommends that the Department should ensure that procedures are in place to inform LMC of all such requirements and that they are implemented by the Commission as appropriate.

· the Group concludes that the clear balance of opinion is for LMC to continue (paragraph 5.7);

· the Group concludes that LMC's activities are essential to the future development of the Northern Ireland red meat industry and are best delivered through the framework of a NDPB (paragraph 5.16);

· the Group concludes that none of the activities currently performed by LMC is appropriate for contracting out or market testing at the present time. The Commission should however continue to monitor industry developments with a view to assessing the potential for achieving better value for money through alternative arrangements (paragraph 5.20);

· the Group concludes that there is no scope to merge LMC with any other organisation (paragraph 5.23);

· the Group recommends that LMC's remit should not be extended to include responsibility for pig meat promotion (paragraph 5.26);

· the Group recommends that negotiations to finalise details of the processor levy arrangements are concluded as soon as possible and consultations continued to increase the producer levy to an equitable level vis-à-vis the position in GB (paragraph 6.9);

· the Group recommends that levy rates should be reviewed annually by the Commission in consultation with producer and processor organisations (paragraph 6.10);

· the Group recommends that the Commission should endeavour to complete its examination of the potential for generating income in respect of dropped calves so that any legislative implications can be considered in parallel with other legislative amendments arising out of the review (paragraph 6.11);

· the Group recommends that the Commission considers how the difficulties involved in applying a levy to live exports of all cattle (once live exports resume) and sheep from Northern Ireland could be overcome (paragraph 6.14);

· the Group recommends that the Commission should review FQAS funding arrangements making reference to the Industry Standing Committee and the Commission should consider the introduction of an annual fee for continued membership of the Scheme (paragraph 6.17);

· the Group recommends that the Commission, in furthering its marketing activities, should continue to liaise with FFB on behalf of Northern Ireland companies seeking to export and develop speciality red meat products (paragraph 6.25);

· the Group recommends that LMC should participate fully in any consideration which is given to the establishment of an overall Northern Ireland food marketing body (paragraph 6.27);

· the Group recommends the continuation of the existing carcase classification arrangements at the present time but LMC should continue to monitor developments on objective classification with a view to the eventual introduction of objective classification procedures in Northern Ireland (paragraph 6.34);

· the Group recommends that the number of Commission members be increased to nine in order to broaden the scope of the business experience and expertise available to the Commission and to provide a greater measure of flexibility for members (paragraph 6.39(i));

· the Group recommends that the likely time commitments of membership should be made clear when advertising for new members and the importance of meeting these commitments should be clearly spelled out to newly appointed members (paragraph 6.39(ii));

· the Group recommends that the Department should consider the merits of a change from the present annual payment arrangement to payment on a daily basis linked to attendance at Commission meetings (paragraph 6.39(iii));

· the Group recommends that the Chairman's assessment of a member's attendance and contribution to Commission meetings should be an important factor when the re-appointment of members is under consideration (paragraph 6.39(iv));

· the Group recommends that the Commission should continue its more proactive approach in conducting meetings with producer groups (paragraph 6.47);

· the Group recommends that the relationship between LMC and DANI be formalised and set out in a Management Statement and an accompanying Financial Memorandum (paragraph 6.49);

· the Group recommends that at a convenient time it would be appropriate for the statutory functions of LMC to be restated in the light of the current industry structure (paragraph 6.50);

· the Group concludes that a Management Statement should be developed in consultation with DANI and should include DANI's responsibilities in agreeing strategic aims and objectives for LMC, together with performance targets and procedures for monitoring performance (paragraph 7.4);

· the Group recommends that LMC's Strategic Plan should include, in addition to the aims and objectives of the various functional areas, performance targets against which actual performance can be measured (paragraph 7.5);

· the Group recommends that the Department should ensure that procedures are in place to inform LMC of all Government policies to be implemented by NDPBs and that they are implemented by the Commission as appropriate (paragraph 7.6).

Mission Report
by the Control Committee on
Beef Carcase Classification
in the United Kingdom (Northern Ireland)
17th to 20th November 1998
_________

During the mission, three abattoirs, two cold stores and two intervention centres were visited. (List of premises visited and participants in Annex I)

Classification and identification by labelling or by stamping (for intervention only) is carried out by officials[1] of the Livestock and Meat Commission (LMC), operating in nine approved abattoirs (see Annex II).

The cost of the classification is supported directly by the producer who pays a grading fee of £1.00 (+ VAT 0.175) per animal.

In addition to this fee and other costs[2], the producer pays also a part of LMC costs amount to £0.80 per animal.

Control of classification is carried out within the LMC, the senior field officers checking, at least monthly, the slaughter books, the dressing, grading and weighing, operated by the classifiers. Structure and duties of the field services is given in Annex III.

In addition to these controls, the fatstock officers[3] of the Department of Agriculture of Northern Ireland (DANI) are charged with the supervision of operations as provided for in Regulation (EEC) No 344/91. Structure and technical inspectorate of the DANI is given in Annex IV.

Sub-classes are used for specifying fat and conformation scores. Northern Ireland does not sub-divide all classes, only conformation class O is divided in two sub-classes using the symbols "+" (high) and "-" (low) and similarly fat class 4 divided in two sub-classes using the letters "L" (low) and "H" (high). As regards the dressing, the national specification is now the same as the EEC reference dressing, except for steers where codfat remains attached.[4]

1.2.1 The Committee carried out three classification exercises at Granville Meats Dungannon and Ballymena Meat Plant on twenty cold carcases and at Omagh Meats on forty hot carcasses. As N. Ireland only uses two subclasses for conformation O and fatclass 4 and the control committee always uses three subclasses, the graphics of Annex V do not reflect always exactly the level of agreement between the Committee and the abattoirs.

In general the results of the Commission and the experts of the member states were very much in line. Where differences were to be seen they were limited to one subclass.

a) At Granville Meats Dungannon the results of the classification showed, on conformation eight carcases overscored and one subclass and one underscored by one subclass.

The fat assessment showed an overscoring of four carcases by one subclass, two carcases being underscored by one subclass and one by two subclasses.

b) The second exercise at Ballymena Meat showed on conformation one carcass overscored by one subclass and one carcass underscored by one subclass.

The fat assessment showed an overscoring of two carcases by one subclass, five carcases being underscored by one subclass and one by two subclasses.

c) The last exercise at Omagh Meats showed on conformation an overscoring of twelve carcases by one subclass, two carcases being underscored by one subclass.

The fat assessment showed an overscoring by one subclass of seven carcases and an overscoring of two by 2 subclasses; sixteen were underscored by one subclass.

To conclude, the classification of the slaughterhouse and of the Committee showed an excellent degree of convergence. Only four carcases differed by more than one subclass (5%).

1.2.2 As regards control of the classification, they are performed at different levels.

a) Internal Controls are regularly carried out by LMC senior field officers on 20 hot carcases. These checks cover classification and dressing of the carcases. An example of a check form is given in Annex VI.

b) General Beef classification checks are operated by the DANI technical inspectorate at least twice per quarter on regular classifiers (40 carcases). The controls cover classification, category and dressing specifications. Joint DANI/LMC controls are also operated. An example of a check form is given in Annex VII.

c) Standardisation exercises are carried out twice a year by the DANI on irregular classifiers (ie which are not regularly classifying). The most recent exercise was conducted on 29 July 1998 on the full classification team (see Annex VIII).

The Committee understands the need to have those different levels of control carried out, since in nearly all the abattoirs most of the carcases were being hung from the hip directly after slaughter thus making the check of the conformation in chillers impossible.

1.2.3 As shown in Annex IX a), on the first ten months of 1998, each plant was checked in average 15 times by the DANI technical inspectorate, ie one inspection every three weeks. Number of errors amounts for conformation and fat respectively on 12.0 and 10.6% with a bias for conformation of + 10% (i.e. overscoring) and for fat of - 6% (i.e. underscoring). As can be seen from Annex IX c), errors are in general limited to one third of a class and the classification results can be considered as very satisfactory. Inspection reports were produced for the nine abattoirs of Northern Ireland and the controls carried out each time on 40 carcases give an inspection of reliability.

1.2.4 In all plants visited, identification is done by labelling. Except for the weight[5] the required information on the labels and their position on the carcass comply with EU ruling, although more uniformity should be welcome (see examples of labels in Annex X). The new type of label (the so-called Australian label) is now used in all abattoirs.

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 by 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.

2.1.1 There are currently eleven centres involved in deadweight price reporting in Northern Ireland (see list under Annex XI). Prices are reported by six private abattoirs, one co-operative (Granville meats) and four wholesalers who slaughter at the two municipal plants of Ballymena and Newtownards. As can be seen from the example given in Annex XII, deadweight prices are collected weekly by the Livestock and Meat Commission (LMC), on the basis of the daily classification sheets. Prices of all cattle are reported including those purchased at livestock markets (code M). The price reported for the latter must be the cost for the slaughterer of an animal delivered to the plant, i.e. it should include commission paid to agents and cost of transport. All weekly sheets are computerised on Tuesday by noon[6] and a report is produced by LMC on Wednesday morning; after examination for accuracy it is sent to Brussels via the DANI IDES link.

2.1.2 Since all plants and wholesalers are now fully computerised, an important change in the price reporting occurred recently (since 1996) by calculating the weekly prices on the basis of all prices transmitted by all the price reporting centres. In the past, the LMC used only prices collected by four price reporting centres which were to be considered as a representative sample of the average weekly prices. This sample was taken randomly each week. The former system was criticised by the Committee because it could result in up and down fluctuations in prices according to the different price approaches followed by the plants used in the sample, their size or structure, or their geographical location.

2.2.1 In all abattoirs visited, the result of the classification and the category of the animals were given on the invoices and passed back to the producers (see example in Annex XIII).

2.2.2 No correction coefficients were used for the prices transmitted to Brussels due to dressing specifications, except of the hot/cold rebate of 2% and the correction of 0.5% for the non removal of the codfat (on steers only).

2.2.3 Regular checks are carried out by the DANI on the prices submitted by the price reporting centres to LMC, against the producers remittance advice records. These controls consist in:

b) Independent quarterly spot checks of four price reporting centres selected at random for a selected week.

Annex XIV gives all details of the price reporting check on prices submitted for week No 23 (W/C 1/9/98); during the controls performed in four centres, on a total of 1906 prices reported, discrepancies were noted on 7 carcass prices representing a discrepancy of 0.37%.

Price reporting conforms with EC ruling. The Committee was pleased to notice that the recommendation made during the last visit was taken into consideration (the Committee had criticised the sampling method used in calculating the average prices as unsatisfactory). 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.

committee for agriculture and rural development
Inquiry into the livestock and meat commission

Additional Questions from the committee to:
Department of agriculture and rural development

The Committee is grateful to you and your officials for your contributions in writing and in person to the Committee's Inquiry. As indicated by the Chairperson at the end of the meeting on 27 April 2001, there would be further questions. I now submit those which have arisen to date, some of which were touched on at the meeting.

1. At the meeting with the Committee on 27 April 2001 you said that the report of Quinquennial Review of the LMC has been circulated to the industry organisations that contributed to the review, and the main findings and recommendations were largely agreed by them. What is causing the delay in publication and when do you expect a final agreed version of the report to be published?

2. In paragraph 3 of your submission and at the meeting on 27 April you referred to the need for primary legislation if the scope of levy collection is to be extended beyond producers and primary processors. Is the Department considering such a course of action? If so, who else would be targeted for levy collection? How much additional funding would this raise?

3. Although we acknowledge that the Department has, from time-to-time, provided the LMC with funding for specific programmes, it does not provide core funding to the LMC which therefore necessitates a range of levy charges to producers and processors. An Bord Bia in the Republic of Ireland is generously supported by the Irish Government. Why has the Department not considered a similar support programme for the LMC which would remove, to some degree, the financial burden on producers during this difficult time in agriculture?

4. The LMC is incurring an annual operating deficit that has serious implication for its ability to perform its statutory duties as well as its involvement in programmes such as the Farm Quality Assurance Scheme. From where do you see the LMC obtaining additional funding that will allow it to carry out its important functions but will not place undue strain on farmers?

5. In the case of the MLC in Great Britain, costs of Commission members are paid for by MAFF. Should DARD not do the same thing, freeing up some funds for marketing or other activity?

6. Your submission did not answer the point raised in the Chairperson's letter of 13 March when he asked for your comments on the principle of the LMC subsidising one activity through charging for another. For example, should those who bring animals to slaughter be the only ones paying for activities which have wider benefits?

7. Staff of the LMC are trained before taking a test for approval as a licensed classifier. Successful candidates are subsequently licensed by DARD. How regularly are LMC staff members checked by DARD officials to ensure they are maintaining a high skill level as a classifier?

8. The contractual arrangements for classification are between the LMC and the meat plants yet the fee is paid by the producer. In your opinion should this situation be reviewed?

9. The Quinquennial Review of the LMC indicates that the current classification arrangements should continue (p.38) given that there are no viable alternatives at the moment. Assuming this to be the case for the foreseeable future how can the Department help the LMC to ensure that its other good work is not undermined by the ongoing controversy surrounding classification?

10. How far do you consider farmers' complaints regarding the 'misclassification' of animals to be justified?

11. Do you believe that a farmer should have the right to appeal a classification to an independent body rather than a senior officer of the LMC? Wouldn't this, to some degree, remove the controversy surrounding classification?

12. Are you of the opinion that we have an open competitive market in livestock in N. Ireland?

13. Would you be in favour of pricing arrangements based on meat yield if objective classification could be obtained?

14. In the event that another independent body assumed the responsibility for classification the operating surplus on the classification service, which helps finance, FQAS would be lost. Has the Department given any consideration to this possible scenario and specifically how the FQAS would be funded?

15. Your submission did not answer the Chairperson's question as to whether you believe that the classification services provided by the LMC fully meet the needs of the agri-food industry. Can you comment now?

16. You provided the Committee with results of an EU inspection visit in November 1998. When would you expect the next EU inspection to take place? Has DARD made any attempt to monitor the application of the EU standards in the period since?

17. Your submission stated that DARD's approval for marketing or promotional schemes is normally conditional on the provision of a report on the extent to which the programme has successfully met the set objectives. You did not, however, give any assessment of value for money achieved or refer to the findings of any reports. Can you do so now? Does DARD actively pursue receipt of these reports?

18. The processors and the Department currently contribute to a promotional programme. Should the Department not actively encourage retailers to also contribute to such activities?

19. In light of the foot and mouth situation the promotion and marketing of meat products from N. Ireland will undoubtedly assume more importance if the industry is to regain lost ground. Does the Department have any plans to increase funding to attain this goal?

20. How can the LMC in your opinion improve communication with farmers to explain some of the tangible benefits that they receive in exchange for their levy payments?

21. Could you outline what level of consultation the Minister has with the Chairperson/Chief Executive of the LMC in relation to appointments to the Commission?

22. The role of the independent assessor is important in the selection process. How is an independent assessor chosen?

23. The Code of Practice relating to the public appointment process indicates that reappointment to the same post should not be automatic and that the performance of the post-holder should be reviewed. A second reappointment should be exceptional and normally subject to a scrutiny process, including considering other candidates. In the fourth report of the Office of the Commissioner for Public Appointments, 1998-1999, auditors stressed that 'it was essential that Departments demonstrate, with concrete evidence, the individual's suitability for reappointment'. How is the performance of members of the Commission who may be up for reappointment assessed?

24. The Commissioner stated in his report that Departments should look at ways other than newspaper advertising in order to attract a broad range of applicants. You have indicated three ways by which you seek candidates - such as drawing on the Central Appointments Unit, writing to industry organisations, and advertising in the three Belfast papers. This seems like a limited approach that might produce the same names again and again. Has the Department looked at alternative ways to widen the field of potential candidates for appointment to the LMC e.g. advertising or trawling posts outside of Northern Ireland?

25. What criteria does the Department use to ensure that it does not, even accidentally, discriminate against certain groups when advertising the appointments?

26. With the Quinquennial Review recommending that the Commission members be increased to nine, what steps does the Department intend to take to ensure there is an appropriate mix between producer, processor, retailer and consumer, assuming that this change takes place?

27. The Quinquennial Review has indicated the occasional problems with the Commission obtaining a quorum. Will the Department consider the option of payment to members of the Commission being linked to attendance at meetings as suggested in the review?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

committee for agriculture and rural development
inquiry into the livestock and meat commission

Thank you for your letter of 4 May setting out questions in respect of the LMC. While, as you say, much of the ground has been covered previously both in writing and at our meeting on 27 April I have set out below my responses to each of your questions.

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. I will be publishing the Report in the context of the outcome of your investigations into the LMC.

2. The Review Report notes the wish of the LMC to extend the scope of the levy to producers other than beef finishers. This was because there is a view that it is unfair that the burden of levy payment falls solely on finishers and nothing is paid by other parts of the beef production chain. The Report recommended that consideration of this issue be taken forward by the LMC. When this has been completed I will consider the need for legislation. In bringing forward any proposals I would expect the LMC to specify where the levy should be targeted and how much funding might be raised.

3. 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 itself rather than government. This position is consistent with that of the GB Meat and Livestock Commission and with similar organisations in most other EU countries. The ability of the LMC to generate income from certain of the services it has provided, for example on behalf of the Intervention Board, together with government support for specific programmes, has enabled the Commission to operate very effectively in recent years. There is no financial provision for the payment by the Department of core funding to the LMC.

4. As the Committee will be aware the LMC is seeking to increase its levy income in order to prevent a significant deficit emerging. Given the clear differences in levy arrangements between Northern Ireland and GB there is scope for levy income to be increased. I note that processors have begun to pay a voluntary levy and this will be given statutory effect in due course.

5. I am prepared to consider the costs of Commission members being met from public funds though I would wish to have clear reasoned arguments as to why this was appropriate at this time. I would have to take account also, with Executive colleagues, of the implications of what would be a change of policy in respect of payments to NDPB members.

6. At a time when the Commission had built up significant surpluses I believe that it was entirely appropriate that these reserves be used for the benefit of all in the industry particularly where these surpluses were obtained for services provided to eg the Intervention Board. The surpluses from classification fees (which were passed on by the plant to producers) were used solely to offset the costs of the Farm Quality Assurance Scheme thereby benefiting the very same group of producers.

7. All carcase classifiers are subject to supervisory checks by the Department at least twice per quarter. This is in addition to the checks carried out by LMC senior field officers. The Department also holds standardisation exercises twice a year for those LMC 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.

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

9. The Department will continue to supervise the operation of the classification system to ensure that the EU standards are being applied fairly and as uniformly as possible. It will also continue to explain to producers the nature of both the classification system and the supervisory arrangements. In this it will work closely with the LMC itself as well as with producer representatives.

10. It is entirely understandable that in any system which relies on subjective judgement some producers will be unhappy with the classification of individual animals. That in itself does not mean that there are fundamental flaws in the operation of the system. I am satisfied that on the basis of the supervisory checks undertaken by the LMC itself, by the Department, by the Intervention Board and the EU Classification Control Committee, the standards are being applied fairly with the benefit of the doubt in marginal decisions being given to the producer.

11. I am not aware of any evidence that the existing appeal mechanisms are working other than satisfactorily. If any other body was to take over the appeal function there is likely to be additional cost and, in any case, there is no obvious body to whom the function could be passed.

12. I am not clear as to the relevance of this question of the activities of the LMC. As the Committee will be aware the allegation about anti-competitive behaviour in the red meat sector have been considered by the Office of Fair Trading without sufficient evidence emerging to warrant formal investigation.

13. The adoption of a pricing system related to meat yield is a commercial matter though I would support any system which is fully transparent, market driven and related in quality. 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.

14. The LMC is not projecting a surplus on classification charges and hence the question posed does not arise in practice. Future funding of the FQAS is a matter for the LMC and the industry and it is, I understand, currently being addressed.

15. Classification is an EU requirement and I am satisfied that the EU standards are being applied fairly by the LMC. I am not clear as to in what way in the operation of the system the LMC might not be meeting the needs of the agri-food industry.

16. The current programme of visits to Member States by the Classification Control Committee has been abandoned because of workload pressures arising from Foot and Mouth Disease. In any case the programme for this year did not include a visit to the UK. It is not clear therefore when the next visit to Northern Ireland may take place. As indicated previously there is ongoing supervision and checking by the Department of the application of EU standards and I am satisfied that the standards are being applied correctly.

17. Evaluation reports of marketing promotional activities are sought by the Department and the information available does indicate that the activities are cost effective and represent value for money. For example 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 through the campaign. Pricewaterhouse evaluated expenditure in 1997 under the EU funded Beef Promotion Scheme and concluded that the LMC promotional activity was properly targeted and represented value for money.

18. While I am happy to work with the LMC, processors and producers in promoting Northern Ireland beef in any way I can, I suspect that retailers will be reluctant to contribute to LMC promotional activities even though they may benefit indirectly from them. Retailers do engage in marketing and promotion activities through point of sale material, in-store promotions, special offers etc and no doubt would argue that this indirectly benefits their suppliers including those from Northern Ireland.

19. Consideration 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 FMD. This work has both a national and local dimension. At this stage it is not possible to say whether the marketing of meat products, or any other individual proposal, might be an area to which additional funds could be allocated if available.

20. I believe 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. I welcome the fact that in recent years, as well as the extensive contact with the producer associations, 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, by identifying and responding to the needs of the industry, and by engaging in constructive dialogue that the LMC can build on what has been achieved to date.

21. My officials discuss with the chairperson of the LMC the nature of the skills required in any particular appointment before the procedures begin. There is also consultation on issues such as timing and the identification of candidates who might be suitable for appointment.

22. 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. Account is also taken of the balance of the panel with regard to equality issues eg gender and the nature of the particular appointment.

23. Assessment of candidates for reappointment is undertaken in conjunction with the chairman. A report is sought 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.

24. The approach to appointments to date has produced a wide range of candidates for consideration and has not been limited therefore. While I do not rule out actively seeking candidates from outside Northern Ireland (and there is no barrier currently to such candidates applying) where the necessary skills or abilities may not exist here. It is necessary to bear in mind that an outside candidate might be perceived to be less than fully committed to the success and development of the Northern Ireland red meat sector.

25. It is by ensuring that vacancies are widely notified through advertisement in the 3 main Northern Ireland newspapers, and by writing to all industry organisations with an interest in the activities of the LMC, in addition to drawing on the Central Appointments Unit list of suitable people, that the Department ensures that there is no discrimination in making all groups aware of the process of appointment. The Department is an Equal Opportunities Employer and all advertisements carry a statement that appointments are based on the merit principle and on equality of opportunity of employment. Where appropriate specific encouragement will be inserted in advertisements to bring forward applications from under-represented groups.

26. 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.

27. While the possibility of linking payments to attendance will be considered I 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.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Thank you for your letter of 13 March on the above subject. The Livestock and Meat Commission (LMC) is happy to note your Committee's inquiry into some aspects of our operations and we attach herewith responses to the specific matters where you have sought our views.

In answering your queries, we have attempted to describe in fairly full terms the rationale behind our responses, and we hope that this will be helpful to the members of your Committee in the conduct of your inquiry.

We note the likelihood that the Committee will invite us to give evidence to the inquiry on Friday 27 April. I have indicated to your Committee Clerk that since we would like a significant participation by Commission members on the occasion, we would have preferred a couple of additional alternative dates. We are prepared, however, to proceed on the date indicated if alternatives cannot be provided.

1.1. Your letter refers to the unpublished Quinquennial Review of LMC carried out by DARD. This Review was initiated in the autumn of 1998 and Commission members have repeatedly expressed their disappointment that it has not yet been published. Although LMC has had the opportunity to contribute to the Review process, we see the Review document as being the consensus conclusion drawn by DARD from the consultation which took place across our industry sector. As a body set up to serve the industry, it is the Commission's intention to seek to implement as fully as we possibly can all of the recommendations of the Review document when it is finally published. You should note that a number of the core recommendations contained within the draft Quinquennial Review have already been acted upon by LMC where they are within our remit.

2.1. The capacity of LMC to serve the industry has at its very core to be based upon the resources available. Your Committee members may be aware that in the years prior to the BSE crisis of 1996, LMC had built up considerable cash reserves. These reserves had been built up in an era when:

· very little marketing and promotional activity was carried out within Northern Ireland;

2.2. Some criticism had been levelled at LMC for its failure to use these surpluses at the early stage of the BSE crisis. An evolution of LMC activities towards more activity in both the local and GB markets with consequent increases in expenditure has ensued. As a further contribution towards reducing cash surpluses, no increase in the levy funding had been sought between 1988 and 2000. It is appropriate to highlight, however, that we are now approaching the stage where the cash surpluses of LMC will be depleted and we need to determine whether we will significantly curtail our activities or whether increased resources will be available from the industry. We would welcome the Agriculture Committee's contribution to this debate.

2.3. In order to clarify LMC's funding for the Committee, we have prepared the attached Table 1 which shows on a pro forma basis a schedule of our projected annual income ignoring non-core activities. Table 2 shows a similar pro forma expenditure schedule based broadly on sustaining our existing activity level. These schedules exclude Intervention Board activities, classification and Farm Quality Assurance administration, certification and inspection. Where these headings appear, they reflect only the projected surplus or deficit of income against costs.

2.4. The schedules highlight that we do have a significant deficit between income and expenditure, based on our ongoing activities.

2.5. In presenting the above figures, we confirm to you that Northern Ireland slaughtering companies have agreed to the introduction of a "voluntary levy". This voluntary levy has been in place since July 2000 and is being contributed to by all of the major processors. It is our understanding that DARD are in the process of introducing legislation to give statutory effect to this source of income for LMC.

2.6. In regard to your specific question as to how the processor levy can be applied without it being passed back to the primary producer, we would comment simply that this levy should be put in the same category of processor costs as electricity, rates, labour, etc. One can argue that these are all passed back to the primary producer or that they are never passed back to the primary producer, depending on the perspective which one chooses to take. At the end of the day, it is LMC's view that in a free market, the distribution of margin throughout the chain will be based on the competitive forces operating. We believe strongly that the only proper mechanism in the absence of specific legislation for ensuring a fair distribution of the spoils of our industry is to ensure as far as we can a competitive market for livestock. This is why LMC continues to work on the market opportunities and to ensure that the maximum possible percentage of our livestock is suitable for the premium markets which are available.

2.7. Your letter refers to core funding from DARD. It is with regret that we must advise that while the Department is responsible for setting the level at which statutory levies are applied, they do not provide any core funding to LMC. Committee members should note that under the Red Meat Strategy Agreement, some funding from Treasury has been made available through DARD against a specific programme of activities. This funding amounts to 50% of an agreed programme of expenditure over a three-year period, beginning in 1999. In addition, back in 1996 at the onset of the BSE crisis, UK Government provided £250,000 of support, again routed through the then DANI and for allocation towards a specific programme of activity proposed by LMC. Other than these two, we are unaware of any other occasions when LMC received any Government funding. There is no ongoing or routine core funding from Government to LMC.

2.8. It is of course easy for LMC to claim that it should receive Government support. We do note that in regard to the Meat and Livestock Commission (MLC), our sister organisation in GB, a small support through the funding of the costs of Commission members by the Ministry of Agriculture, Fisheries and Food (MAFF) is provided. No further support other than in line with the sporadic allocations received by LMC is available to that organisation. We believe 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. These organisations are affiliated to MLC and as such these contributions may represent additional Government funding in the respective regions.

2.9. We note that An Bord Bia in the Republic of Ireland continues to receive very significant Government support. The support, we understand, is fully cleared by the European Commission under State Aid rules. This example is somewhat unusual, if not unique, in regard to the quantum of Government support which is provided.

2.10. Committee members may be aware that throughout Europe, and indeed in most significant meat-producing countries throughout the world, an organisation of similar standing to LMC is in existence. Most such organisations are funded through levies applied to the industry, usually at point of slaughter but also in a number of instances as a transaction charge on every livestock transaction throughout the chain. Looking at similar professional organisations across the world, significant Government support tends to be the exception.

2.11. Surpluses from beef and sheep classification charges made by LMC have never been used to support general LMC activities. Under an agreement set up in the early 1990s, it was determined between LMC, the Northern Ireland Meat Exporters' Association and the Ulster Farmers' Union that surpluses from classification activities of LMC would be specifically directed towards the costs of running the Northern Ireland Farm Quality Assurance Scheme for Beef and Lamb (FQAS). This practice has continued right up to the present day. By the end of the current financial year, however, these surpluses (which have been specifically highlighted in our annual reporting to the industry) will be virtually exhausted. Any balance remaining will be available to Northern Ireland Food Chain Certification (NIFCC), who from 1 April 2001 are being contracted to provide inspection, certification and membership registration services to the Farm Quality Assurance Scheme.

2.12. During the year just ended, we anticipate that our classification service will just about break even and will make no contribution to our overheads. Our budget for 2001-2002 anticipates classification to be loss-making at direct cost level. Sheep carcase classification in particular has become significantly loss-making.

2.13. In summary, the funding of LMC has and will continue to be completely transparent to the industry. Annual Reports are available each year to any industry participant on request to our Secretary. It is important that the fullest possible debate is encouraged to ensure that LMC, if it is to continue, is, on the one hand, held properly to account for the value which it is expected to add to the industry but, on the other hand, expectations are set at a level that is commensurate with the resources made available.

TABLE 2 - Proforma Expenditure Schedule (excluding expenditure from non-core activities)

3.1. It is a requirement under European law that all beef carcases offered for trade must be classified in accordance with the European Classification Grid. There is no regulatory requirement for sheep carcases at this time. It is further a requirement that the competent authority in each Member State puts in place measures to ensure that the standard set down in the regulation is properly applied. The delegated competent authority in the case of Northern Ireland is the Department of Agriculture & Rural Development. In offering a classification service to the industry, LMC has responded to requests by producers and processors for an independent body to undertake this service. As mentioned above, this activity has always been separately accounted for within LMC finances and by agreement surpluses, when they existed, were applied to the costs of running the Farm Quality Assurance Scheme (FQAS).

3.2. The operation of a classification service presents LMC and its staff with considerable difficulties. These difficulties relate primarily to sporadic abuse from a small number of producers and commentators who are unwilling to accept the validity of our classifications. On the other side, we have difficulty with some meat plants who perceive our classifications within Northern Ireland to be more lenient towards producers than classifications applied in GB. In providing the service, LMC operates an appeals system whereby if a producer is in disagreement with the grade applied by the Classification Officer, he/she can appeal to a Senior Officer to review the grade. We do maintain a full record of the appeals and we note a very strong correlation between the volume of appeals received and the price movements in the marketplace. (When prices move downwards, the volume of appeals moves upwards.) By way of example, in the month of February 2001 we had a total of 68 appeals involving 478 carcases out of total cattle slaughterings for the month of 37,281. Of these carcases, 19 were upgraded. Please find attached a bar chart (Figure 1) setting out the number of appeals over a period of approximately two years. It is perhaps also worth noting that the increasing prevalence of aitchbone hanging required for some customers eliminates the opportunity to appeal a cold carcase. This does occasionally cause some frustration.

3.3. In regard to your question as to whether LMC inspection staff are able to operate without undue influence from processing plant management, we have little record of complaints from our Field Staff in this regard. To be fair to processing plants, it is in fact unusual for them to complain to classification staff. Their natural inclination is to voice their complaints at a corporate level rather than at an operational level.

3.4. As a service provider, LMC does periodically arrange visits by Senior Classification Staff to plants in both GB and the Republic of Ireland to compare the interpretation of standards. Likewise, we receive visitors of similar standing from both GB and the Republic of Ireland from time to time. It is the view of our own staff and visitors that the classification service is operated to a very similar standard across the British Isles. Committee members are aware from our earlier evidence sessions that it is the responsibility of the competent authority in the Member State to ensure that the classification standard is properly enforced. Whilst DARD represents the competent authority locally within Northern Ireland, the superior expertise is provided by MAFF in London. As a service provider, it is incumbent upon LMC to be fully co-operative with the competent authority both locally and in London in meeting the regulation. There is a comprehensive record available from DARD regarding our 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, however, is deemed to be within acceptable limits, bearing in mind the subjectivity of the process, particularly on the boundary between each conformation and fatness grade.

3.5. Committee members are further aware that the European Commission (EC) periodically visits every Member State to carry out an inspection of the implementation of the regulation. To the knowledge of LMC, there has never been an EC inspection 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, we believe, under debate as a consequence of the alleged over-leniency to the producer in the interpretation of the standard.

3.6. As mentioned above, there is a 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 were available. It has been well-publicised that trials were conducted last year in the Republic of Ireland on the three most advanced systems available to determine whether the technology was at a stage where it could be adopted to replace Classification Officers. Regrettably, the conclusion was that none of the manufacturers' equipment tested could accurately and reliably allocate a grade, which is necessary to meet the requirements of the European regulation. However, the equipment did seem to have some merit in its capacity to make an accurate determination of the yield of meat in a carcase. It therefore seems to LMC that the European Commission should be strongly urged to consider the adoption of modern technology, to move with the times, and change its price reporting structure from that based on subjective grades to one based on meat yield objectively measured. It would therefore probably be more fruitful to abandon any further development work to try and make the equipment predict a grade, and instead to concentrate on harnessing the equipment to predict yield, with further refinements to predict the distribution of the yield in the high value cuts. This technology is already being investigated in competitor countries.

3.7. If and when the equipment is developed to meet this requirement, LMC will be strongly encouraging its adoption throughout the slaughtering plants of Northern Ireland.

4.1. In expanding on the promotional activities of LMC, it is important to highlight initially two guiding principles on which we feel it appropriate to operate:

· Strategically, we must recognise that Northern Ireland is not a low cost producer of red meat and, as a consequence, we have 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 we do needs to be complementary to the specific activities of both processors and retailers who are essential participants in the chain of distribution.

4.2. In order to maximise the impact of all of our promotional work, LMC does on all occasions seek to supplement our levy income through obtaining supports and grants from other sources as far as possible. It is particularly relevant to highlight that in the aftermath of the 1996 BSE crisis, on encouragement from LMC, the then Department of Agriculture and Department of Economic Development jointly drew together a cross-section of the red meat industry to form a "Red Meat Strategy Group". This group, as well as LMC, Department of Agriculture, IDB and LEDU, had participation from NIMEA, NIAPA and the Ulster Farmers' Union. The group produced a Red Meat Strategy designed primarily to assist recovery of our beef market with specific emphasis on re-engagement in exports. It also sought to address opportunities for better positioning across all of our red meat in the marketplace. The strategy document, submitted to Government in 1998, resulted in eventual European Commission approval for financial support of the expenditure programme of that strategy to the extent of 50% by Government over a three-year period, starting in 1999. (This programme is the same as mentioned earlier in this letter under the funding section.) The other 50% is from industry through LMC levy income. The Red Meat Strategy Group continues to meet regularly and contributes significantly to the formulation of LMC marketing and promotional activity.

4.3. It is appropriate also to highlight that in addition to our internal resources, LMC draws on the expertise of outside professionals where appropriate to assist in the formation of polices. As an example, on matters of advertising, it is normal to consult with relevant advertising agencies. In particular, since the commencement of a collaboration agreement with MLC in April 2000, it is normal also to access the research data which is available from that source.

4.4. In responding to your question on the value for money achieved by our expenditure in this area, we would first of all comment that it is generally a requirement, where either European or UK Government money has been used to supplement our own funds, that an independent assessment is carried out on the effectiveness of the individual programmes. There are some areas, however, where the outcome is either too long-term to be immediately assessed, or alternatively the value is immediately clear and does not require independent evaluation.

4.5. As a core function within LMC, our Marketing Department divides its promotional and marketing activities into three geographic areas:

4.5.1. As mentioned earlier in this letter, prior to 1996 and the impact on consumer confidence in beef resulting from the BSE crisis, LMC engaged in little activity in the local marketplace. On the basis of the limited funds available and the fact that within Northern Ireland only approximately 20% of our red meat production was consumed, it was believed that resources were best targeted towards export market development.

4.5.2. When the BSE crisis arrived, a clear need arose to communicate with local consumers in regard to the standing of Northern Ireland beef in particular. Questions in regard to our standards of production, our quality assurance arrangements and the general excellence of our red meat required a response to reassure Northern Ireland consumers. Red meat as a whole within Northern Ireland, if it were a branded product, would represent the biggest food brand in terms of turnover. LMC has concluded that there is a strategic importance in ensuring that lines of communication are kept open to consumers, local retailers need to be supported and there is an important role on behalf of the Northern Ireland industry in ensuring that retailers in, and distributors to, the catering trade are encouraged to use locally-produced product. In essence, LMC since 1996 has assumed the role of "brand guardian" for Northern Ireland beef and lamb.

4.5.3. The resources available to our sector for promotion, relative to most fast-moving consumer goods categories, are very limited. It is not possible for us to engage in the widespread advertising and high profile sponsorship campaigns that might be the norm for large multinational companies producing drinks, breakfast cereals and confectionery. We do, however, have vitally important messages in regard to the nutritional attributes, the provenance and, increasingly, the health benefits of red meat which we believe must be conveyed as well as possible given the constraints placed upon us. Additionally, our industry needs to actively promote through recipes, demonstrations, etc. modern preparation and cooking methods that fit in with modern day lifestyles, where time spent in the kitchen in most households is reducing in favour of work and increasing leisure activities.

4.5.4. Most market research highlights the difficulty of retaining young people as consumers of red meat. Changes in school curricula, changes in lifestyle and the massive weight of promotion and advertising of "junk food" lead us to conclude the necessity for our industry to actively engage, through every possible means, in portraying the benefits and the attractions of red meat, particularly to a younger generation. This has led us in our local promotional activities to focus the majority of our activities within the education sector. We have succeeded in developing a very productive working relationship with the schools, both in regard to meal-providers and in regard to the teaching side. LMC provides support to the sector through:

4.5.5. Our annual expenditure within the Northern Ireland marketplace is of the order of £400,000 of which two-thirds is attributed to our activities in the education sector. While this expenditure is supported currently by European Quality Beef subsidies, this funding is under considerable pressure and has been cut back significantly in recent years. At the current time, this outside funding is under debate at European Commission level and may or may not be available to LMC in the future.

4.5.6. Annual evaluations of most of the elements of our programme within Northern Ireland are undertaken by independent consultancies. By way of example, we enclose under Appendix 1 the most recent example of such evaluations (still in draft form).

4.5.7. Great Britain has historically been the major market for Northern Ireland red meat. Prior to 1996, LMC estimates that approximately 30% of our production went into this market. Since the BSE crisis of 1996, this has grown to account for in the order of 60% of our production (still based on total slaughterings including OTMS). Within the GB market, the best returns are available from the premium multiple retailers. The Northern Ireland processing industry, since its export markets were removed through the export ban, has made substantial progress in building business with these premium retailers. In order to achieve this, however, it is critically important to our industry that we have the capacity to brand our product as "British Meat". This is the brand which is attached to the vast majority of beef and lamb sold by the major multiple retailers. The brand is essentially owned by the GB industry and supported and promoted by our sister organisation, MLC in GB. In order to secure full and proper qualification for the attachment of this brand to Northern Ireland red meat, LMC has entered into a two-year agreement with MLC whereby we make a significant contribution to the promotional budget of MLC for beef and lamb. The financial contribution which we make is essentially a pro rata contribution to the MLC promotional budget to the share which we enjoy of the "British Beef" and "British Lamb" market within GB.

4.5.8. Our budgeted expenditure for the years 2000 and 2001 is £450,000 per annum.

4.5.9. No formal independent evaluation of this expenditure is carried out. It is clear that MLC's promotional campaigns in GB are highly effective as this is the only market in Europe since 1995 that has achieved growth in beef consumption (of the order of 5%). The benefit to our local industry can be readily calculated on the basis of the average premium on Northern Ireland cattle over Republic of Ireland cattle. This premium we estimate at 9p/kg or £27 per beast over the last year. This is equivalent to a benefit to Northern Ireland beef producers of over £10 million per annum.

4.5.10.LMC, like the rest of the red meat industry, continues to be frustrated by the ongoing beef export ban. More recently, the ramifications of losing our Foot & Mouth Disease-free status are likely to be significant. The Red Meat Strategy, however, and our own aspirations on behalf of the industry are very much built around the expectation that at some point in the future we will be able to re-engage in the exports which have historically accounted for approximately 50% of the production of our industry. We believe that it is, in this context, vital that we remain active in sustaining contacts in export markets, keeping abreast of customer developments and looking for new opportunities for customers who in the medium-term have the desire to source premium high quality beef and sheepmeat. The Red Meat Strategy described earlier and the Red Meat Strategy Committee are very much at the core of our international activities. The activities of the strategy, however, have had to be varied to reflect the continuing beef export ban which was not envisaged when the strategy was produced. Activities on this front can be summarised as follows:

4.5.11.A programme to build a "world map" of the red meat industry is ongoing. Countries that have been investigated range from North America, Australia, New Zealand, Middle and Far East to a number of European countries. A comprehensive report has been produced on each country investigated and, where appropriate, contacts are made and visits to Northern Ireland by potential customers arranged. Reports prepared are made available to all participants in the NI red meat industry.

4.5.12.LMC seeks to co-ordinate and support red meat industry participation at major international food fairs. This consists primarily of SIAL and ANUGA, in alternating years. It is appropriate to acknowledge the work of Trade International and the support that they provide to the broader Northern Ireland food industry in participation at such events. In addition to the co-ordinating role played by LMC, we generally provide some enhancement of the basic stand provided by Trade International specifically to facilitate our sector. While the financial contribution is not insignificant from an LMC perspective, it is small in comparison to the total cost. At these events, LMC has also assisted financially and organised programmes for groups of producers participating in market awareness visits.

4.5.13.Prior to the beef export ban, Northern Ireland enjoyed the best cattle prices in the British Isles and amongst the top in Europe. The strength of the Greenfields brand in the Netherlands was a major contributor to this situation. After the ban, the major Dutch retailer involved with us lost access to beef from Northern Ireland and the brand lay dormant until 1999 when we agreed that the brand would be relaunched using beef from Northern Ireland and the Republic of Ireland. At the time of this decision, we were beginning to re-engage in export markets through the Export Certified Herds Scheme, but this subsequently was lost to Northern Ireland as a result of the identification and traceability problems revealed about mid-1999. On the positive front, the relaunch of the Greenfields brand has been a great success with Dutch customers, but unfortunately, other than some benefit to a Northern Ireland processor, no ongoing benefit to our industry has as yet materialised through the use of Northern Ireland cattle.

4.5.14.Following the very positive experience of the Greenfields brand in the Netherlands, there has been much debate about the potential for branding of Northern Ireland beef in other markets. The Assembly Agriculture Committee in particular, in its recent report on the beef industry, highlighted the importance of investigating branding within our particular sector. As a consequence, LMC are in the process of commissioning a study which we hope will give a definitive understanding of the merits and feasibility of branding of Northern Ireland red meat.

4.5.15.Within our marketing budget, we have allocated approximately £425,000 for the current financial year to provide the full range of international activities described above but we anticipate that this will be reduced to about £300,000 per annum thereafter.

4.5.16.A formal evaluation of activities supported by the Red Meat Strategy is required as part of the implementation process.

4.5.17.We have already identified a significant new business for lamb which has been generated in Switzerland where we estimate an annual turnover value of in excess of £1.5 million per year.

4.5.18.We can also highlight the value of the Greenfields brand in the Netherlands in January 2001 when Dutch cattle at farm gate level were on average worth £1.09/kg as against equivalent Republic of Ireland cattle for Greenfields at £1.50/kg.

4.6. In regard to your questions on assessment of the balance of benefits from LMC's promotional activity as between producers, processors and retailers and the merits of spreading the costs further along the chain, we would advise that no assessment of this has been carried out. We do not believe that it is possible to make a definitive determination in regard to such a balance.

· In dealing with major multiple retailers, it must be understood that Northern Ireland processors already make a significant contribution to promotional campaigns by their customers.

· These retailers themselves will argue that at point of sale, through promotion and advertising in their in-house magazines and through special offers, they already make by far the largest contribution towards promotion of beef and lamb.

4.8. We need to be aware, furthermore, that retailers in particular, but also to a significant degree processors, in a free market economy 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. If Northern Ireland producers through our work are assisted in positioning their output in the best possible markets available, then the producers of Northern Ireland are indeed the major beneficiary. It is important to note, for example, that following the recent BSE crisis across European markets, Northern Ireland producer prices have held remarkably well and this, we believe, is solely attributable to the quality of markets which we are serving. Commodity beef has been freely available in the UK market at a producer equivalent price of well under £1.20/kg. Throughout this period, Northern Ireland beef has sustained an average producer price of almost £1.60/kg.

4.9. It is also interesting to note that the funding of our sister organisation in GB is mainly from two separate levy streams, one a general levy and the other a promotional levy. While we are not privy to the debate within that organisation, it is interesting to note that the promotional levy is entirely funded by producers, although the general levy is funded by both producers and processors.

4.10. In conclusion, we are convinced that the marketing and promotional work of LMC adds significant value to our red meat industry. The independent evaluations which are available on individual elements of our activities, although not for our activities as a whole, are supportive of this view. We are very pleased to note the support for LMC's work recently provided by Northern Ireland processors through the introduction voluntarily of a "levy" payment from that source, but we think that it is unlikely that retailers will willingly contribute even though they do inevitably benefit, in particular from the educational work carried out by organisations such as LMC. Throughout the world, where professional organisations equivalent to LMC exist, their primary funding comes from producers. In many instances secondary funding is provided by processors, but we are not aware of an example where core funding comes from retailers.

5.1. Appointments to the Board of LMC are entirely the prerogative of the Minister having responsibility for Agriculture in Northern Ireland. It is our understanding that the level of consultation on appointments with either the Chief Executive or the Chairman of LMC has varied considerably over the years.

5.2. 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 be 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.

5.3. In addition to the above, Commission members feel that it is critically important that the three major interest areas across the industry are represented on the Board:

5.4. In regard to the proposal contained within the draft Quinquennial Review document, to increase the Commission membership to nine, LMC is generally supportive of this proposal. It would help to ensure that all of the interest areas were covered, it would better facilitate the availability of a quorum for Commission meetings and it would, we believe, help to guarantee that a full intellectual rigour was applied to debates on policy issues in regard to LMC activities. We would highlight, however, the importance of reaching a clear understanding as to the appropriate mix of representation. It is noted that considerable damage to the standing of LMC with the farming community was done when a previous Minister, ignoring the advice of Department officials, made appointments to LMC which failed to recognise the importance of having skills, knowledge and experience at producer level at our Board table. The current Board, we believe, demonstrates a more appropriate mix.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

I would like to thank you and your colleagues on behalf of the Committee, for appearing before them on Friday 27 April as part of their Inquiry into certain aspects of the Livestock and Meat Commission. The session was very useful and will help the Committee considerably when they come to consider their final report.

At the end of the meeting the Chairperson informed you that due to time restraints the Committee was unable to put to you and your colleagues all the questions that they had hoped. The Chairperson suggested that these questions should be sent to you for a reply. Please see below a list of those questions, some of which were touched on at the meeting, and contain references to your written submission to the Inquiry.

1. You have indicated in Paragraph 2.2 of your submission that the cash surpluses of the LMC will soon be depleted and that it will be necessary to determine whether the LMC's activities will be significantly curtailed or if resources will be available from the industry.

a. Although at the meeting with the Committee you mentioned cutting back on promotion and marketing, could you say exactly what activities might be curtailed; whether there are any other areas or activities that might be considered; and how these would affect the farmer?

b. From where might you expect increased resources, given that farmers are currently facing the total loss of their livelihoods, and consequently agriculture is facing, potentially, a long-term recovery?

2. On page 5 Table 1, the projected annual income of the LMC, ignoring non-core activities, is outlined. What effect would the inclusion of non-core activities have on these figures?

3. For how long do you believe the LMC can continue to operate based on ongoing activities?

4. In paragraph 2.5 you refer to a 'voluntary levy' contributed to by all the major processors in N. Ireland. Why would processors wish to make a voluntary contribution to the LMC? In your opinion what return do processors get from making such a contribution?

5. It is easy to make a voluntary contribution if you know that it will be returned to you in the form of increased charges to the primary producer. Do you think that the cost of such voluntary contributions is being passed down to the farmer?

6. The Department does not provide you with core funding. Given the current situation that many farmers currently face and their inability to contribute to any additional levies to help fund the LMC's activities, wouldn't the provision of core funding even in the short to medium term help alleviate the financial pressure on them and at the same time allow the LMC to continue with its activities? Have you considered making representations to the Minister in respect of the financial situation faced by farmers and your organisation?

7. You refer to the 'distribution of margin throughout the chain' depending on the competitive forces operating, and that in the absence of specific legislation to ensure a fair distribution of margin you must work to ensure 'as far as we can' a competitive market for livestock.

a. To what extent do you think you are being successful in maintaining a competitive market and hence a fair distribution of margin? .

b. Where in your procedures or strategy do you think you could make improvements, given the appropriate resources, in order to ensure a competitive market?

8. You have indicated that income generated through classification services is directed towards the costs of running the N. Ireland Farm Quality Assurance Scheme for Beef and Lamb and not to support general LMC activities. How will this scheme continue to be funded if, as you say, the surpluses will be exhausted at the end of the financial year?

9. It is unreasonable to expect any organisation to continue operating if it is generating an annual deficit and you yourself have noted in paragraph 2.13 that it is necessary to set expectations of the LMC at a level commensurate with the resources available. Could you describe how a future LMC would operate with no further increase in funding?

10. In the quinquennial review of the LMC there is a suggestion that an annual fee should be considered for continued membership of the Farm Quality Assurance Scheme in order to address the operating deficit i.e. £327,000, incurred by the combined classification and FQAS activities in 1998/99. Would you support this approach to maintain the scheme? Were any alternative funding sources considered?

11. The 5 year review appears to be recommending that you look at generating income from dropped calves and notes that you intend to collect levy at live markets to secure funding from export animals. The UFU does not support a levy on dropped calves and has dismissed as unworkable the collection of a levy from live animals. Can you explain further the LMC's current thinking on these proposals and explain the difficulties that would need to be overcome.

1. You indicate on page 6, paragraph 3.1 that there is no regulatory requirement for classification of sheep carcases at this time. However, there is:

concerning the Community scale for the classification of carcasses of ovine animals and determining the Community standard quality of fresh or chilled sheep carcasses and extending Regulation (EE) No. 338/91

that is currently in force. DARD has also confirmed in their submission that there is a carcase classification of sheep and that it is based on meat colour and fat class. Could you explain why you state that there is no such classification?

2. It is indicated in paragraph 3.2 of the submission that there is an avenue for appeal to a senior officer to review a grade. Is there a similar appeals process for the meat processor if it is felt that the grade is too generous in favour of the producer? If so what proportion of these appeals are upheld?

3. The basis of any appeals process is that it should be independent. To what extent do you feel that the independence of the appeals process is compromised by the fact that it is a Senior Officer of the LMC to whom a producer must appeal? How long does the appeals process take e.g. is a Senior Officer always on site to conduct an appeal and thereby facilitate the efficient processing of animals?

4. You refer in paragraphs 3.4 and 3.5 that bias has been recognised in favour of the producer. How have you attempted to convey this information to farmers and their representatives in order to address the perception among producers that your classifications are biased towards processors?

5. Any classification method must involve assessing an animal in relation to a set standard otherwise the subjectivity of the process is exacerbated. Isn't it true to say that if the quality of animals on any particular day is higher than usual then an animal that might get a high grade on an 'average' day would get a lower grade if assessed in relation to the high quality animals? Similarly, an 'average' animal might get a higher grade than expected if poor quality animals have been graded before it. How do you ensure that an animal receives a fair grade no matter what the quality of the animals that have preceded it?

1. In paragraph 4.4 you state that an outcome from a promotional project may be too long-term to be immediately assessed. How and when, will the expenditure programme for the Red Meat Strategy initiated in 1999 be assessed?

2. The draft evaluation of the N. Ireland promotional programme estimates an increase in beef consumption over the contract period of 6.5%. Does this meet your targets for the programme? Do you anticipate that there will a further application for funding submitted to the European Union in order that this marketing and promotional activity can continue?

3. If European funding is no longer available for such programmes what contingency plans do you have to continue with the marketing and promotional activities?

4. Your submission doubted whether retailers would willingly contribute to promotional costs even though they invariably benefit. In terms of a 'levy' this is undoubtedly correct. However, in giving evidence to our debt inquiry, retailers did offer to participate in new bodies or schemes and to offer advice using their knowledge of the market. Would you agree that there is potential which could, indeed should, be tapped?

5. In paragraph 4.5.7 you indicate that it is important to brand our product as 'British Meat'. Could you briefly outline the advantages/disadvantages of having our meat products branded as a product of N. Ireland e.g. 'N. Ireland Beef' as opposed to 'British Beef', considering, for example, that N. Ireland has a much lower incidence of BSE than Gt. Britain?

Would it not be more beneficial to the livestock industry in N. Ireland to have a N. Ireland brand to market our products?

6. To what extent have the activities of the Red Meat Strategy been reassessed in light of the beef export ban and the current ban on the export of animal products due to the foot and mouth situation?

7. The Greenfields brand in the Netherlands is referred to as being a major contributor to the high cattle prices in N. Ireland prior to the export ban. Do you expect in the long term that N. Ireland cattle producers will benefit from the relaunch of the Greenfields brand?

8. When can we expect the results of your commissioned study into the merits and feasibility of branding of N. Ireland red meat?

9. You have identified that there should be an evaluation of the activities supported by the Red Meat Strategy (paragraph 4.5.16). When will this happen and do you expect an independent source to undertake the work?

1. How do the qualities required of Commission members that you outline in your submission vary with the criteria used by the Department?

2. The quinquennial review has indicated that there have been 'occasional difficulties' in achieving a quorum (p.39). Considering that members presumably knew the requirements the Commission would have on their time before accepting the position and given that meetings take place only once a month, why have there been difficulties in achieving a quorum? To what extent is the recommendation to expand the Commission to nine members a move to address the problem of not achieving a quorum?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

committee for agriculture and rural development
inquiry into the livestock and meat commission

Further to our previous submission on the above subject, to our appearance before the Committee on Friday 27 April and specifically to your further communication of 3 May, I am pleased to provide further responses to Committee questions as follows:

1a. Commission members have not yet given detailed consideration to the areas of LMC activity that might be curtailed if additional resources are not made available. For clarification, we would advise that the Commission has agreed a budget for the current year which broadly sustains all of the activities at a similar level to the year just ended. On the presumption that this budget is adhered to, we will run down our cash balances to the minimum level which could reasonably be contemplated by the year end (31 March 2002). It follows, therefore, that if additional resources are not forthcoming, a curtailment of our activities under the headings

will have to be implemented. As our Marketing and Promotion expenditure is significantly greater than Information Services and Agriculture expenditure combined, the curtailment will inevitably have to fall most heavily on this area.

Information Services is the functional Department responsible for collecting, analysing and distributing data on markets for beef and sheepmeat. We also provide information on all legislative and other developments in Northern Ireland, Republic of Ireland, UK and Europe which might have a relevance to the Northern Ireland beef and sheepmeat industries. The main interface of this activity with farmers is:

Of these, the greatest cost by a considerable margin is "The Bulletin" publication. We have noted that requests for "The Bulletin" have increased considerably over the last couple of years and its circulation has grown from circa 7,500 per week in 1999 to over 11,000 per week in 2000.

Our activities within the Agriculture Department relate primarily to providing services to producers which will enable them to produce to farm gate the highest quality of beef animal and sheep appropriate to the needs of the next customer in the food chain. Thus we attempt to develop our understanding of the market needs from our beef and sheepmeat industry, develop these needs into practical application at farm level and seek to communicate to producers the types of livestock and production systems which they should be aiming to produce and practise. A major part of this activity is the development of quality assurance standards, the promotion of the Northern Ireland Farm Quality Assurance Scheme to customers, and maintaining the standing of this scheme as a competitive tool in the marketing of Northern Ireland beef and sheepmeat as against products and quality schemes from other regions. Within this Department, we also seek to support farm group initiatives. Our help tends to be in the area of developing production protocols that will assist with marketing finished livestock and in helping to leverage sources of funding which become available from time to time for such groups.

Future budgeted expenditure in this area is relatively small and is limited to salaries/office overheads and some publications. Part of this expenditure will continue to be supported by Farm Quality Assurance income under the formula recently agreed between producers and processors.

From our earlier correspondence, you will have noted that our Marketing and Promotion budget is split into three roughly equal parts:

Our focus in Northern Ireland is primarily to educate the local population in regard to the benefits of red meat. The nutrition and other health benefits are at the focus of this work but we seek also to promote the convenience aspect of our products and their fit with modern-day lifestyles. This work is for the most part long-term in its nature. It is not readily possible to measure the return from this work other than to highlight the relatively high red meat consumption of the Northern Ireland population and, through our work with focus groups etc., to cite the very high level of enthusiasm for the consumption of beef in particular within Northern Ireland. The impact on farmers of ceasing this work is likely to be modest in the short-term, but if we do not seek to sustain current eating habits and to build similar habits in the next generation, the slippage in consumption levels is likely to be extremely difficult, if not impossible, to reverse.

As highlighted in our previous correspondence, the GB market is currently critical for Northern Ireland. The availability of the GB multiple retailer market is the one attribute that sustains Northern Ireland producer prices substantially above commodity prices. Our entering into an agreement with MLC so that we could benefit from the circa £12.8 million annual promotional budget for beef and lamb of that organisation and enjoy the use of the "British Beef" brand was concurrent with a very substantial development of market share by Northern Ireland processors in this segment, subsequent to the BSE-related export ban. If, as a consequence of not renewing our agreement, Northern Ireland producers lost this premium market segment, we have estimated that Northern Ireland producers could lose of the order of 10p/kg from finished cattle prices. This is based on the gap between Republic of Ireland and Northern Ireland prices. The likelihood is that we would be in a worse position than the Republic of Ireland given their access to international markets and possibility of live cattle exports. The loss in regard to sheepmeat, however, is unlikely to be of such significance.

Our investment in export marketing could be deemed to have no short-term impact on beef producers, although we do work actively to support the marketing of sheepmeat. Our consideration in withdrawing from this area, however, will be the need for our industry, including producers, to be able to operate in a much larger marketplace than the UK in the longer term. The process of building and sustaining relationships with past and potential future customers is important, particularly with premium customers, since business with such customers is not normally part of daily or weekly trade but is based on long-term confidence and long-term relationships.

Committee members will note from the above the very considerable difficulty which the Commission will have in determining where the curtailment of expenditure should be applied.

1b. LMC has the expectation that increased resources should be made available from the following:

(i) Giving statutory effect to the currently voluntary processor contribution so that its application becomes universal for every animal slaughtered within the Province.

(ii) The introduction of legislative measures to ensure collection of all current levies due. While it is currently part of the legislation on levies that livestock leaving Northern Ireland live are eligible to pay, LMC has no practical or economic means of collecting such levies and therefore these have substantially remained unpaid. The main loss is in regard to sheep and we anticipate that legislation requiring the collection of this at livestock marts is the only viable solution.

(iii) We do anticipate that producers will make an increased contribution to LMC. While we appreciate the difficulties that many producers are experiencing in achieving profitability, producers' representative bodies must decide whether they believe that the activities of LMC can contribute to maximising their return from the marketplace.

· Do producers benefit from a sustained high level of red meat consumption in Northern Ireland?

· Will producers benefit in the future from access to premium markets across Europe and beyond?

While it may be difficult for individual producers to draw a positive conclusion to each of these questions, we believe it is incumbent upon those involved in leadership of the farming community, those involved in Government and those who are opinion-formers across our industry to think seriously on these matters and to discuss them comprehensively with LMC, with our processors and with our customers and consumers.

If at the end of such a process the conclusion is negative, then it will be an obligation on LMC to operate within whatever level of resource is forthcoming.

While we believe that the above comments adequately respond to your specific question, we believe that it behoves us to comment further on your suggestion that our red meat sector is potentially facing "a long-term recovery". We would highlight to the Committee that under Agenda 2000, it should be expected that yet a further decline in beef market prices in particular is likely to occur. Since the commencement of the Agenda 2000 reforms and the increase in subsidies, we have not seen the expected decline in market returns. It would be over-optimistic to assume that this trend will continue as the CAP reforms proceed.

Committee members should note also the Department of Agriculture and Rural Development statistics in regard to the cost base of Northern Ireland beef production, which highlight the massive difference in production costs between our most efficient producers and our least efficient producers. These figures highlight that the best producers in Northern Ireland in the current marketplace can produce beef profitably. As we have stated in previous submissions to the Committee, while the level of profits may not represent an adequate return for the investment in both labour and assets, a positive return from both beef and sheepmeat production over recent years and up to the present-day has remained possible.

We would further highlight to the Committee that Northern Ireland red meat prices remain very substantially above world prices and if we cannot sustain a presence in premium markets for our output, then the prospects for profitability of even our best producers will come into serious question.

2. The inclusion of non-core activities add to both the income (Table 1) and the expenditure (Table 2) tables of our earlier letter as follows:

3. As stated above, our budget for the current year has been prepared on a basis broadly of continuing with all ongoing activities. At the end of the current year, our liquid assets will be equivalent to roughly two months of expenditure.

4. This question should be more correctly addressed to Northern Ireland processors. It is our opinion, however, that the following factors have influenced processors in reaching their decision:

· All of the major processors contributing have from time to time sought and gained assistance from LMC in dealing with particular markets or particular customers.

· Processors have recognised the need for equivalence within Northern Ireland to the contributions made to MLC in GB by their counterparts there.

· Processors agreed under Red Meat Strategy (RMS) discussions to make arrangements which would ensure that both producers and processors were jointly funding the industry portion of RMS expenditure.

· Processors recognised the work of LMC in undertaking generic-level promotion and marketing work in Northern Ireland, GB and export markets.

5. The capacity of processors to pass on their costs to farmers is, as we have stated earlier, solely dependent on market circumstances. During most of the period since the introduction of the voluntary levy, we have noted that there has in fact been quite a shortage of livestock, cattle in particular. In these circumstances we have noted a general closing of the gap between Northern Ireland producer prices and GB producer prices. This gap has from time to time been less than our estimate of the additional costs to a Northern Ireland processor of serving the GB market as against a GB-based counterpart. As there has not been a reduction in producer price against sales value (in fact the opposite) which might have serviced the processor voluntary levy, we are confident that the cost of the voluntary contributions has not been passed down to the farmer.

6. Consideration has not been given to an approach to Government for core funding. We do note and agree with the Committee's suggestion that such funding, depending on its quantum, would indeed be helpful in shielding farmers from requests for additional contributions. If it were to transpire that such a recommendation was forthcoming from the Committee's report, we would indeed be very willing to pursue such a course. We would caution, however, that given the priorities of Northern Ireland Government, and given the fact the our sister organisation in GB does not receive significant core funding from Government, it may be imprudent to assume a positive outcome from such representations.

7. In the period up until the BSE-related export ban, it is LMC's view that the distribution of margin throughout the chain was perhaps favouring the producer as against the processor. Competitive forces were delivering to Northern Ireland producers some of the highest prices for cattle across Europe. Prices for most of 1995 were the best in the British Isles. Following the BSE export ban, the industry was highly dependent on intervention, but as intervention purchasing was gradually withdrawn due to a combination of improving prices and currency movements, we came through, towards the end of 1998, a period of considerable imbalance between supply and demand and the differential between Northern Ireland livestock prices and GB was sustained for considerable periods at levels of the order of £70 per head for average steers. On the positive side, this price differential did facilitate a major growth in GB multiple retailer business which, once established, has been broadly sustained as the differential has returned to significantly lower levels.

7a. At this stage, it is our view that we have not yet been as successful as we would wish in achieving a competitive market and the sort of distribution of margin which we feel would be appropriate. On the one hand, we note the considerable differential in price in favour of Northern Ireland farmers over Republic of Ireland farmers. On the other hand, we feel that the differential between Northern Ireland farmer prices and England & Wales farmer prices should approximate to the incremental transportation cost associated with the boat journey to GB mainland. We would estimate this to be 3-4p/kg (carcase deadweight equivalent price). Realistically, to move beyond this sort of benefit to producers will require the opening up of export markets. This will not be a guarantee of better margin as factors such as exchange rate and a depressed mainland European market continue to make GB the most lucrative market in Europe at the moment for beef. However, it is a fluctuating business and it is essential from a Northern Ireland perspective that we have access to all potential markets. The law of supply and demand will determine which is best.

7b. At a strategic level, the major deficiency which our industry has is the considerable volume of cattle which do not meet E, U and R conformation grades, which tend to be the core specification of premium retailers. The high preponderance of dairy genetics, the low levels of returns, etc. all conspire to the presentation of too low a percentage of our production falling into commodity product specifications. We strongly believe that the maximum possible resource from Government, ourselves and the industry should be directed in an effort to increase the percentage of our beef falling into E, U and R grades. The pay-off of this for farmers and for the entire industry will, in the long term, be quite massive. Processors tell us time and again that poor grading carcases presented to them by farmers can only be offered to the commodity market at very low prices relative to the premium retailer level, and the cost of "disposing" of poor quality carcases holds back any further premia for high quality cattle.

8. The Farm Quality Assurance Scheme Standing Committee consists of Ulster Farmers' Union, Northern Ireland Agricultural Producers' Association, Northern Ireland Meat Exporters' Association and LMC, together with DARD representation. The industry side of this Committee has been debating for most of the last year new and sustainable funding arrangements for the Northern Ireland Farm Quality Assurance Scheme. We are pleased to report to the Committee that industry agreement has been reached whereby the Farm Quality Assurance Scheme is being upgraded to achieve EN45011 accreditation and a more sustainable funding arrangement is being put in place. The agreement reached is that 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 yield approximately equal funding from the production and processing sectors. Our estimates indicate that this will generate sufficient funding to fully meet the costs of administration, certification and inspection as well as providing some resources for the proper marketing of the scheme, including the generation of appropriate literature and support documentation for farmers. There will be an undertaking by processor members of the scheme that they will appropriately differentiate prices paid to Farm Quality Assured producers presenting animals for slaughter as against non-FQAS producers to encourage scheme membership. The implementation of this agreement has been thwarted through the curtailment of meetings because of the Foot & Mouth Disease crisis, but we are on the threshold of formally communicating these arrangements throughout the industry, including the approximately 11,000 producer members.

9. It is for the Commission members to make the final determination on policy matters but the writer would anticipate that the most likely out-turn will be the withdrawal of LMC from Northern Ireland marketing and promotion activities, the discontinuation of contributions to MLC for GB promotion and the curtailment of export marketing activity to attendance at international exhibitions and possible hosting of international visitors to establish the credentials of our industry.

10. Our estimate for the annual running cost of the Northern Ireland Farm Quality Assurance Scheme for Beef and Lamb, and operating that scheme to EN45011 standards with the current level of membership, is £750,000 per annum. The arrangements described at 8. above will, we believe, provide sufficient income and, since this is the consensus view across the industry, LMC is fully supportive of the arrangements.

Early in the discussions, the alternative of fully funding by farmers, necessitating an annual membership fee of the order of £75, was considered. In Scotland, England and Wales, where separate beef and lamb quality schemes already exist, membership costs are fully funded by producers at this level. However, this was rejected and the principle of equal joint funding by producers and processors was agreed.

11. The approach of generating levy by imposing a levy on every bovine and ovine animal born in Northern Ireland has indeed been considered. The rationale for pursuing this was based upon the need to spread the levy burden across the sectors to include participants other than livestock finishers. The benefits of LMC activities, it is argued, accrue to all producers throughout the chain, including dairy farmers producing calves which are reared for beef but not usually on their farm of birth, and we had concluded that it would be a laudable objective to spread wider the burden of funding LMC's beef and lamb activities. The implementation of this suggestion, however, is exceedingly difficult, and it may be cumbersome to collect such levies until the animal is ultimately presented for slaughter when all accrued dues might be collected.

Of more recent times, we have been considering that a better alternative for spreading the levy burden more widely would be to seek legislation that would change our levy structures towards a "transaction levy" requiring a payment on each occasion when livestock changes ownership, whether at a slaughter plant or at an auction mart. This is the system which is operated in Australia and, from our understanding, it works quite successfully.

We do very much appreciate that the Ulster Farmers' Union view on these matters is likely to be critically important to ourselves and to Government as we seek agreement on the best way forward.

We noted at our appearance before the Committee the concern expressed by Committee members at the extent of the 20% latitude allowed in the implementation of the classification regulation. We were surprised to note this concern in the Committee and feel it appropriate to expand a little further, since Committee members have not taken up our invitation to view classification in practice.

Classification is not a precise science; it is based on a judgement. As Mr Mark highlighted in his evidence to the Committee, the extent of the latitude recognises that the correct classification is an opinion of experts. The European Classification Control Committee periodically visits Northern Ireland to review our classifications. The Committee, consisting of the order of twelve members who are deemed experts, from a range of European Member States and from the Commission, is the ultimate authority on the interpretation of the standard. This Committee visits plants in Northern Ireland and each of the experts carries out his/her own personal classification of a range of cold carcases in a chill. The Committee then reviews the expert opinions which, we must highlight, do vary from one another. The classification grade which is deemed correct is the consensus grade agreed by the Committee after discussion of their individual grades. The Control Committee is usually joined also by both a Member State expert and, in the case of Northern Ireland, a local representation from DARD. LMC would normally have only observer status.

It is against this background that a 20% deviation from the consensus is permitted by individual Officers. The Classification Control Committee would, however, expect the deviation to be a deviation on both sides of the norm and not to be skewed in any particular direction either favouring or otherwise the producer interest. LMC Classification Officers can maintain their classification licences even if they disagree with up to 20% of carcase grades against the competent authority (DARD) classification - the system recognises that the competent authority itself can be in error in regard to a percentage of carcases.

LMC has evolved with the industry an understanding that on the boundary between two grades where the judgement is difficult, LMC Officers give the benefit of the doubt to the producer, and this benefit of the doubt results overall in the competent authority (DARD) deeming LMC classifications to favour producers by a grade increment in approximately 10% of carcases.

It may be of benefit to the Committee if we yet again repeat our invitation to Committee members, either collectively or individually, to visit with us one or more meat plants to view the classification process and to discuss with our Senior Officers any concerns which might remain. It is perhaps appropriate also for us to apologise for the absence of a contribution to the discussions at our evidence session of our Chief Field Officer. Our Chief Field Officer has been absent on medical leave now for a number of months and his condition has not permitted him to make a contribution to the current debate.

1. By way of further clarification of our earlier letter, we intended to convey that regulations do not require the classification of sheep carcases offered for trade, but where classification is operated in sheep slaughter plants, the regulation cited in your letter does indeed set out the standard. The sheep classification service in Northern Ireland has therefore evolved from the needs of local processors and producers rather than from the needs to classify under regulation. The service is helpful to local processors both in determining value in sheep carcases but also more importantly, in many instances, in meeting the requirements of their customers where particular grades form part of their purchasing specification. Committee members will be aware that sheep carcase classification is also extremely useful to producers and to producer groups. We are continually asked to report to both individual producers and to producer groups details to allow improved selection of breeding stock and to facilitate selection of best size, weight and finish of animals for the particular market.

2. Technically, the appeals process is indeed available to meat processors but our Senior Staff can recollect only a couple of instances of such appeals over the last few years and there is recollection certainly of one incident where that appeal was indeed upheld by the Senior Officer.

3. It might indeed be argued that because the appeal is carried out by LMC, it is not fully independent. We would argue, however, that the Senior Officer is tasked with determining the correct grade only on the basis of the evidence of the carcase and not on the basis of support for a subordinate member of staff. The appeals process does add significantly to the cost of our service provision and any alternative appeals process to another party while saving LMC costs would inevitably have to be separately funded.

A Senior Officer is not always on site to conduct the appeal, but this is not in any way prejudicial since the definitive classification should always be performed on a cold carcase and is more correctly conducted after overnight chilling. The hot carcase classification carried out on the slaughter line at the weigh-point in the slaughtering plant is designed to predict the final classification and experience determines that this can be satisfactorily done. We would highlight, for example, that the European Classification Control Committee always make their determination on cold carcases.

4. In reporting to the Committee that we give benefit of doubt to the producer, we would highlight to you that such benefit could not be officially sanctioned and the matter of publicity is a sensitive issue. We have, however, fully conveyed the facts to the farmers' representative bodies at the various meetings which we conduct each year with them. We have also highlighted this matter in our annual producer meetings. The difficulty is, therefore, to disseminate such information in a manner which is, on the one hand, not prejudicial to LMC or the competent authority (DARD) with the European Commission and, on the other hand, allows Northern Ireland farmers to understand that they do indeed get benefit. Striking the balance is very difficult.

5. In publishing the regulations, the European Commission has provided definitions of each class and a pictorial guide to help practitioners in the provision of a classification service. This guide is provided by LMC to all of its Classification Officers whilst they are in training and a copy is enclosed herewith. Furthermore, Senior Staff of LMC moving across a variety of abattoirs will seek to take out any human judgement issues which might arise. Thirdly, the competent authority (DARD) officers act as a further leavening force in overseeing the implementation of the standard. Finally, the circumstances which you describe, in the view of our Senior Staff, 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, etc. We believe therefore that within the boundaries of human judgement, every animal receives a fair grade from the service which we provide. On average, we are absolutely confident that Northern Ireland producers benefit from a professional service offered to the industry by LMC.

1. It will be for the independent agency appointed to decide how best the assessment is carried out. Ultimately, any assessment will consider the strategy, the programme of activity carried out and if the programme of activity achieved the objectives of the strategy. Such assessments are normally completed within six months of the programme being completed.

2. LMC set a target of 2% growth in consumption of beef during the period of the current Strategic Plan, using 1998 National Food Survey data as a base.

A further application for funding has been made to the European Union; we have been advised that a modified programme of support will be forthcoming later this year.

3. In the meantime, LMC have continued the programme of activities funded entirely from LMC resources, and it would be the intention of LMC to continue this work so long as resources permit.

4. LMC too have found retailers "willing to participate in . schemes, and offer advice using their knowledge of the market." We would cite Tesco's collaboration with LMC in the promotion of Northern Ireland Aberdeen Angus beef in January as being a particularly good example.

(a) It has been promoted extensively, with MLC investing in the order of £8m per annum in consumer marketing the brand for several years. It doesn't make sense for us to try and compete with this given our resources and the fact that we currently receive the benefit of being able to sell under the British Beef label.

(b) Part of the strength of this brand is derived from the anxiety of the GB multiples to be seen by British farmers as being supportive of British agriculture.

Whilst Northern Ireland has many positive attributes in terms of production, we must be extremely cautious in highlighting superior disease status as this can be a hostage to fortune. Past experience in Europe has shown where one particular country tried to reassure consumers by being negative about non-national product, they only succeeded in undermining consumer confidence in all beef, their own included.

Of particular relevance also is the fact that our best customers - the GB multiple retailers - 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.

As we have touched upon before with the Committee, the cost of developing and maintaining a Northern Ireland consumer brand in a market of the scale of GB has been estimated at £3-£4 million per annum. It is difficult to envisage Northern Ireland producers funding such a development. The branding issue across a selection of markets will be addressed more fully in the research project currently being commissioned by LMC and the Red Meat Strategy Committee.

We would not wish to prejudice the outcome of a commissioned report, but we would draw your attention to a consumer survey, conducted by the General Consumer Council for Northern Ireland, of the factors that are important to the consumer when shopping. Even to our own Northern Ireland shoppers, the origin of the product from Northern Ireland did not rate highly (graph enclosed).

6. The Red Meat Strategy Steering Committee is scheduled to meet again on 17 May, when the industry will be able to decide if changes are necessary as a consequence of the Foot & Mouth Disease situation. As indicated in our earlier submission, some changes have already been made due to the continuing BSE-related ban.

As much of the activity is of a long-term nature, it can continue. The beef export ban has been around since the strategy was produced; in the meantime we have sought to position Northern Ireland in the best possible way to "hit the ground running" when the opportunity arises.

9. The evaluation will be undertaken by an appropriate independent consultancy and will commence when the funding allocated by Government has been spent.

1. While the qualities which we have outlined in our submission are the qualities which we in the Commission have defined, we believe that the approach by the Department is in reasonable accord with our views.

2. The "occasional difficulties" in achieving a quorum would not be deemed to be sufficient in itself to require expansion of the Commission. It is important for Committee members to understand that Commission members function as "Non-Executive Directors". They have therefore, by implication, other business interests which constitute their main source of income. It is not unreasonable, therefore, that from time to time every Commission member will meet circumstances where priority has to be given to these other interests and the member will have to absent him/herself from a meeting. Very occasionally, this can occur with several Commission members simultaneously. There has only been one occasion in the last seventeen years when a quorum was not available, although occasionally the start of a meeting has been delayed due to late arrival of one or more Commission members.

We apologise for the length of this further response, but we have again, given the importance of these matters, sought to give as full a response as possible. We do hope that these further contributions will be helpful to the Committee in its consideration of a final report.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

In response to Dr Paisley's letter of 13th March 2001, NIMEA offers the following information regarding your committee's inquiry into the Livestock & Meat Commission.

By way of introduction the Northern Ireland Meat Exporters' Association represents some 16 cattle and sheep EU Export approved slaughtering and processing companies in Northern Ireland. It should be noted that not all slaughterers are members of the Association.

I am responding under the four main headings as set out in the letter from your Chairman.

Point 1 in the terms of reference attached to Dr Paisley's letter of 13th March 2001, mentions core funding of LMC by the Department of Agriculture. This is news to us, for as far as NIMEA is aware LMC do not receive any funding from Government. However having raised the matter in your terms of reference NIMEA would fully support Government funding of LMC equivalent to the support from the ROI Government to Bord Bia. As far as MLC in GB is concerned we understand that Government pays the MLC Commissioners' fees and expenses something which does not happen in NI as far as LMC is concerned. NIMEA would therefore support and welcome any added Government funding to equip LMC to tackle promotion of NI products in similar terms to our competitors. We also believe that LMC needs greater funding and powers as part of a centralised food agency. LMC should have the overarching control of all promotions within the meat and lamb sectors, including areas that are currently carried out by DARD, LEDU and IDB. It is our observation that there are similar bodies established and supported by Governments in every beef producing country in the world. It also has to be stated categorically that the main beneficiary of beef and lamb promotion is the primary producer.

NIMEA expresses concern that the result of the recent Government Quintennial review of LMC has not been published and that this further inquiry is a duplication of what has already been done and thus a double expense and not good use of the public purse.

When it is considered that over 75% of our beef and lamb production have to be marketed outside NI it is of the utmost importance that a promotion agency such as LMC exists. There is a similar body in the ROI in the form of Bord Bia and a similar body in GB in the form of MLC. When we look at the rates of promotional levy funding that both of our competitors get, Bord Bia in ROI [£Ir 1.50+ £1.00 for cattle and £0.20 for sheep] and MLC in GB [£4.35 for cattle and £0.63 for sheep], we are by far the poor relation. Yet we are equally if not more so dependent on product promotion than either of them. [See point 5 below for details of levies] Our levy funding must come more into line with GB at least and should be at the level of around £3 rather than £0.80. The movement of half a million sheep to ROI evading the LMC levy is also a point that needs addressed so that LMC is properly funded to fulfil its full task. The LMC should remain independent of Government subsidy but 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.

LMC have demonstrated to the industry that their income comes from three main sources, [a] a levy paid by producers and [b] by agency duties carried out by LMC on behalf of other UK agencies and [c] projects undertaken by LMC on behalf of specific clients.

It is our belief that LMC is seriously under-funded at the moment from the levies collected from SOME farmers. Farmers who choose to operate through livestock markets do not contribute to LMC operations yet demand attention from the LMC. Farmers currently market around 500,000 lambs per year through livestock markets which are subsequently "exported" to the ROI with the evasion of LMC levies when leaving NI. Thus it is not accurate to say that all beef and sheep farmers are contributing to LMC. It is our opinion that as in Australia, the Government should introduce as part of the Statutory levy, a "Transaction Levy". Every time livestock, cattle and sheep, are sold through a market a levy per head should be paid to LMC. This levy could be at a lower rate than the final slaughter levy and would mean that all producers and the entire production chain would be contributing to the promotion of the product in which they were involved. 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 and £0.10 for each sheep slaughtered. This was agreed to as voluntary as the devolved administration was not in place for the necessary legislation to be introduced to implement a processor contribution in line with GB and ROI.

Deductions 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 and therefore be clearly demonstrated that producers were not funding the processor contribution.

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. The current rate of levy contribution to such a body only demonstrates that producers themselves do not have the desire to promote their own product.

The result is very simple, no promotion = lowest returns. Whether LMC is needed is not the question. The question is how much do we want to promote NI beef and lamb. The returns will be commensurate with that investment.

In our submission to DARD some time ago NIMEA included points on post devolution changes that we believe are required in respect of LMC support and these are re-sated below.

(a) LMC should have a much stronger and direct access to impacting Government policy in respect of the beef and sheep industry, in both NI and the UK.

(b) LMC should have direct accessibility to NI Ministers without necessarily having to go through DARD channels.

(c) In view of the need for more direct links with Brussels, LMC should have a definite link into the EU policy-making structures in MAFF.

(d) LMC should also have direct links into any cross border agricultural body, which may be established as part of the new Assembly arrangements.

(e) The statutory legislation should be changed to allow LMC to operate in the ROI under particular circumstances where there is a marketing need for their services on both sides of the border, particularly in border counties.

Classification by its very nature is a controversial issue and no doubt LMC at times would rather not be involved and indeed as an independent body may well be better without the task in the interests of developing transparency in the supply chain. To fully appreciate the debate on Classification of sheep and cattle carcasses the full EU Classification legislation has to be read, understood and appreciated. This permits a number of options as follows

(a) ALL classifiers have to be licensed and operate to the required EC standard by the competent authority in each Member State, which in the case of NI is DARD

(d) Classification can be done by inspectors of the Government Departments in Member States.

In GB classification is done by a combination of [b] plant classifiers and [c] MLC classification service and in the ROI it is done as at [d] by Government inspectors.

In NI prior to 1990, classification was carried out by the Department of Agriculture, who at that time, decided to shed and privatise that function. A number of individuals offered to provide such a service to the industry and discussions took place between the producers and processors. In the interests of having a fully independent service all parties agreed to request LMC to provide the service as a totally independent body with no axe to grind with any of the parties involved. Today LMC still carries out this function under licensing and supervision of the Competent Authority in ALL slaughterhouses in NI and is still accepted as the most independent means of performing this function. Classification is much more than just applying a Grade to an animal. The legislation also includes the checking of the weighscales, the confirmation of the accurate weight, the confirmation of the carcass dressing specification of which there is only one in NI as compared to 5 or 6 standards in GB. It also includes the determination from carcass inspection of the correct category of the carcass i.e. steer, heifer, cow, bull or young bull.

Individual classifiers themselves are mostly from farming backgrounds and at times lean towards the producer rather than administer strict EU standards.

However on the whole, year on year since 1991 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.

NIMEA can see benefits of cost to the larger plants in providing their own classifiers. However, even though they worked to the standards of the Competent Authority this would not be seen as independent and therefore for the time being the LMC is the only fully independent body offering an established classification service in NI. There is no desire to change that until a more professional body or method displays itself. As a further service to livestock producers, this may well be an opportunity for the Assembly to establish and provide under the European Legislation a separate, exclusive and totally independent classification service, thus relieving LMC of an extremely arbitrary function.

The EUROP grid classification we believe has now outlived its usefulness and the industry needs to move to a more sophisticated method of evaluating carcass value and saleable lean meat. The problem is that nowhere as yet is there a more cost effective or more efficient method than the human eye. However, being aware of tests and research being done across the world we believe that within 5 years this function will be more accurately performed by advanced technology. All NIMEA members would welcome that advancement as soon as possible.

As far as "grading disputes" are concerned there is an appeals procedure in place that is constantly made use of by any party who disagrees with the classification result. It is accepted from NIMEA's point of view that there has to be a final adjudicator and once the appeals procedure has been properly implemented a final result which is accepted perhaps at times on an "agree to disagree" basis is reached. Problems arise when the EU inspectors arrive to carry out their community checks and experience has shown that at these times there can be a slight tightening of standards which disturbs the normal operating of the service. NIMEA has no major problems with grading disputes.

LMC Classification staff attend plants in a "third party guest" role to carry out their function. They are at all times under the employment and management of LMC and therefore are not under any obligation to the plant in which they operate. At times however there is considerable influence and pressure exerted on classifiers by producers to have carcasses graded higher than warranted. It is at this stage if things go astray that the appeals procedure is invoked and things levelled out again. 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.

Classification in GB is carried out as stated earlier by plant classifiers or by MLC classifiers. NIMEA members who have operations in ROI and GB are well placed to compare classification in all three regions. In each region there would be what could be termed "regional quirks" but in the main the system operated across the two islands is relatively parallel. There are certainly no wide variations of interpretation of the standards but because of the human element there will always be small individual differences. All classification bodies work hard at eliminating these differences but it is deemed that it takes 10 years for a classifier to be fully conversant and confident in the job.

LMC perhaps could do more to instil into its classifiers the importance of being an accurate independent service. It is accepted that in the main the best foundation for the job is someone who has a beef and sheep producer background with college training. However by virtue of that, this type of individual comes with a built in bias towards producers. It is the changing of that attitude to be totally independent and unbiased that leads to a competent classifier.

The members of NIMEA are all keen to move as soon as possible to objective classification. However as stated earlier there is nothing available as yet that can give a better assessment of cattle and sheep carcasses than the well-trained human eye. This is partly due to the fact that there is such a wide range in both cattle and sheep shapes, weights, lengths, and sizes. These species are unlike pigs which are much more uniform and where a degree of objective measurements has been implemented. The further problem that the EC insists that any mechanical means must transcribe the results into the EUROP grid is a serious and in our opinion unnecessary hindrance to the development of such equipment. However we believe it is only a matter of time until such equipment is available and our opinion is the sooner the better.

Promotional activity is seen as one of the LMC's strongest points and they and only they are best equipped to do this work. They are working independently yet on behalf of the industry and perform this necessary function extremely well, especially since the last Board has been appointed. This activity needs to be better resourced and further strengthened and developed to meet the needs of the industry in a new millennium. Like marketing it 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. LMC policies are determined by the Board which is representative of the entire chain, Producers, Processors, Marketing and Business.

The function of the LMC has changed immensely over the past 10 years with the acquisition of functions and services previously provided by Government. The LMC performs a number of essential activities in the promotion of the beef industry in N.I. Due to N.I. dependency on markets outside the Province and indeed the UK, an independent body like LMC is a very necessary part of the entire quality assurance chain and acts as the catalyst between customer and supplier and indeed producer and supplier. It is the only, and indeed very necessary body which provides a co-ordinated integration between producer and processor. 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. Some recent staff appointments with years of experience in the industry have been excellent choices and placed LMC in a much stronger position to fulfil their role. However there is still some way to go and 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.

NIMEA's position for some time is that because of the development of the industry in NI over the past 15 years that the current Board of 7 is rather restrictive in terms of the width of experience required on the Board. The Board should be increased in size from 7 Commissioners to 9. The Board should not necessarily be representative of the Agri-Food industry per se but should be those who can demonstrate marketing vision and contribute to the marketing potential of the beef and sheep industry of NI.

DARD has informed NIMEA in recent years when vacancies on the LMC Board are being advertised in the press and in return NIMEA has encouraged potential candidates to apply for appointment. However further than that NIMEA has had no input to the appointments.

The structure of the LMC should be adapted to more represent the industry needs of the 21st century. It should continue to be managed under a Board of appointed Commissioners made up of people nominated by the various industry sectors. 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 at least give some perception to the "separateness" of functions co-ordinated under the Board. The current Board of 7 should be increased to 9 and be more specific to allow wider and proportional representation of the groups involved. There should be three reps from the processing sector, two farming reps, one retail butcher rep, one other meat sector related person, one food industry related independent chairman. There should be one person from the Food Service sector, for instance a retired manager from one of the major multiples. The appointees would act in their own right and not necessarily be muzzled by their own particular sector opinion. The various sectors should have input into the appointments and the Board Members must have a sound experience of at least their relative sector. Because of the sensitive commercial activity of the LMC and the future viability and survival of the NI Beef and Lamb Industry, and due to the very commercial nature of the LMC, appointments to the Board should be by Ministers from nominations, but should be exempt from the Nolan principles. We see the Nolan principles in the case of LMC as contributing to mediocrity. By nature the type of person with industry experience and essential business competence, who is essential for Board Membership of LMC would not apply for such positions.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Additional Questions FROM THE COMMITTEE to:
Northern Ireland meat Exporters' association

At the end of the meeting with you and your colleagues on Friday 4 May the Deputy Chairperson informed you that due to time constraints the Committee was unable to put to you and your colleagues all the questions that they had hoped. He suggested that these questions should be sent to you for a reply.

Please see below a list of those questions, some of which were touched on at the meeting, and contain references to your written submission to the Inquiry.

1. In GB there are two elements to the levy - a General levy and a Promotional levy. The slaughterhouse pays 50% of the General levy while the producer pays the balance of the General levy and all of the Promotional levy. While you have said that the levy funding in N. Ireland should be brought into line with GB you have not indicated who should contribute to the fund and how much. Could the Committee have your views on this?

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

4. What are your views on encouraging the retailers to subscribe to promotional activities for N. Ireland meat products?

5. The LMC has indicated that much of its budget for promotional work in N. Ireland is spent on education. Considering our main market is through export, is this money well spent in your opinion?

6. What in your opinion are the priorities for the LMC in relation to their promotional and marketing work? Are there aspects of their promotional/marketing programme that do not represent good value for money ?

7. The LMC has the primary role in co-ordinating promotional activity on the industry's behalf. The IDB aims to improve the competitiveness of individual companies in the red meat sector while the DARD role is mainly to improve skills and competencies of workers in the industry as well as enabling producers to respond to market demands. You also referred to LEDU and rural development authorities and the need for one single spearhead promotional body under the LMC umbrella for the beef and lamb sector. What are your views on how this might be successfully achieved?

8. The processor's levy paid on a voluntary basis towards promotional activities is a welcome development i.e. £1 for cattle and 10p for sheep. You have raised what you perceive is the reticence of producers to pay for promotional activities. What do you think would be an acceptable levy for producers to pay towards the cost of promotion?

9. You state "categorically" that "the main beneficiary of beef and lamb promotion is the primary producer". How can this be the case if the primary producers are not getting a decent return on their animals?

10. To what extent is the reticence of producers to contribute to promotional activities through levies due to lack of communication of the ultimate benefits to them through contributions?

11. You make the point that we are more dependent on promotion since approximately 75% of our beef and lamb is marketed outside N. Ireland and have suggested a levy of around £3 rather than £0.80. What would this mean in terms of increasing our meat exports?

12. You have said that an increase in the size of the Board of the LMC from 7 to 9 would allow wider and proportional representation of the groups involved, yet you envisage only 2 farming representatives. How is this proportional, considering that it is farmers who, to the greatest extent, are paying for the Commission? What steps can be taken to ensure all sections of the industry are represented on the Commission?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

committee for agriculture and rural development
inquiry into the livestock and meat commission

I will reply to your questions in the order in which you ranked them in your letter of 11th May 2001.

When we said that the levy funding in NI should be brought into line with GB, that is exactly what we meant, i.e. the funding would 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 from the GB breakdown, that is in fact not the case because funding retailer promotions is a matter directly between plants and retailer and outside the generic promotion by LMC. One example being the money NI plants have individually had to put up in relation to in-store promotional activity by Albert Heijn in Holland on top of the generic promotion and traceability work done by LMC. The producer is always the beneficiary of positive promotional activity no matter who pays.

It is our 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 and over the year he probably "gains on the roundabouts what he loses on the swings." This type of producer is also keen to adapt to supply what the market wants in terms of weight and quality.

It is also our experience that those who shout loudest and complain tend to be those who produce the poorer quality cattle and want the quality price for the poor quality product. The main complaints area is in the division between the O and R grades which coincidentally is the dividing line also between beef bred animals and dairy bred animals. It tends to be the mixed farmers rather than professional beef producers with animals which come from the dairy herd that appeal grades and who least understand the classification standards.

If a classifier is inconsistent it must be remembered that inconsistency can be in both directions and like the "share buyers warning" the result of an appeal can lead to downgrading as well as upgrading. It has been a matter of principle that plants do not appeal grades where the appeal could result in "downgrading".

The appeal system in the first instant should 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, the competent authority. Given the personnel in place in LMC and DARD currently, while the final authority lies with DARD, the higher competence would be in LMC.

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, it is hard fought, hard earned, competitive servicing from which many of our competitors would aim to dislodge us. It is our view that this is outside the normal commercial contractual relations between supplier and retailer. However, 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.

Market research shows that there is a swift increasing percentage of the younger generation becoming pro-vegetarian, and survey figures suggest this to be in the region of 5% and rising annually. 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 encourage it as a regular ingredient in meals.

It has to be remembered that NI has not exported beef for over 5 years and there is still no indication that there will be an imminent return to exporting. There is therefore little use in promoting the products in export markets that cannot be supplied. The only markets available to NI at the moment is the home market [absorbing about 18% of production] and GB marketplace [which absorbs the remainder] and it is across the UK that the younger generation are moving away from meat eating.

This is a very wise use of current promotional funding. Processors are very 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 LMC for the HE 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. This is an initiative for which LMC is to be congratulated. Perhaps you should ask the HE teachers who have attended the seminars to contribute to your inquiry and allow them to give you their own evaluation of the meat education programme. As I understand it, this programme was made available through joint funding from the EU and displayed LMC initiative in securing EU funding for a worthy project.

LMC have been forceful in exploring many potential markets for both beef and lamb. Just because this exploration most of the time does not yield business is no reason to adjudicate it as not representing good value for money. The market place is ever changing and so LMC must be proactive in discerning where to focus its attention. That activity must be left to the marketing experts on the Board of LMC and within the ranks of LMC. If the correct people are appointed to the Board, then this activity should not be shackled by Government or anyone else, dictating what they should or should not consider as priority for market research.

NO agency from Northern Ireland should go off anywhere in their independence or consign taxpayer's money to companies of whatever size without going through and getting approval for their activity from the generic promotional body, LMC. On occasions in the past agencies have spent money bringing potential meat buyers to NI to introduce them to suppliers only to the embarrassment of themselves and those already doing business with them. We are simply saying that any agency who wants to engage in the promotion of NI beef and lamb should have to operate through, and be directed by, one overarching spearhead body, and with its understanding of the wider world meat markets, that body should be LMC.

This question is answered at question 1 above, if the activity and promotional rates used in Scotland, Wales, ROI and England are anything to go by [and we are dependant at the moment on the GB marketplace], then our promotional rates and activity should at least mirror theirs.

The answer to this question is simple. Returns at the moment are relative to the quality of beef cattle being produced, the current market and the promotion being undertaken. When the NI promotion budget is compared with those with whom we compete within these islands it can be seen that we are the very poor relation and ours is but a fraction of what others are spending. A clear case for improving both cattle quality and the promotion budget. There are times that promotional activity is required simply to be able to "stand still" in the market place.

There is a rhetoric and misconception around that the world is queuing up to buy NI beef and lamb. NI beef and lamb 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.

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. [This would actually be suicide for the NI Red Meat Industry.]

The professional beef producer fully understands the requirement to promote his produce and is willing to do so. This brings us back to the question of vision for the NI industry and where we want to see ourselves positioned in the market place. If the producer is not willing to be involved in the promotion of the product he produces and thus his own livelihood, then he cannot expect to get premium prices. If the producer wants to do his "own thing" rather than be market led then again he cannot expect the premium for his product.

Processors continually feed market requirement information back to the producer directly or through LMC and their own producer club or web-site communications. The professional beef and sheep producers tend to keep themselves well informed and adapt accordingly. Most of the "griping" comes from those who tend not to familiarise themselves with the market they are supposed to be producing for. There is a serious educational programme here for DARD to change the attitudes and practices of producers who view a world class retail market place as the "enemy" rather than one of the sources of their livelihood. The LMC is also to be congratulated on taking groups of producers to SIAL and ANUGA each year to let them see what others are placing before the food buyers of the world and against which NI producers have to compete.

It is difficult to quantify the amount of return from promotion in terms of £ and p. The increased levy would simply allow the NI industry to match the promotional activity of our competitors rather than us lying behind as the poor relation. It may be that the real return in terms of increased levy will simply be that we retain the market share we have fought for and secured to date. Do we really want to be in the premium market sector or are we content to be an "also ran?" As a NI industry where do we want to position ourselves? That then determines to what extent we promote ourselves.

With the greatest of respect to the farming sector, they are not the best people to be involved in marketing. Look at what has happened to the farmer-controlled marketing boards of the past. The Pigs Marketing Board, The Potato Marketing Board, etc. Those who are engaged in the marketplace must do the marketing and win the contracts and provide the customer service. 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 that market place. That is not to say that farmers should not be represented in the generic promotion, as they need to determine where they as producers want to be positioned. 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. Remember 80% of the product has to be marketed outside NI.

In our submission we clearly stated what we believe the correct balance of the LMC Board should be. From our own experience in the past, discrimination in favour of either producer or processor will cause imbalance and a lack of co-ordinated determination in respect of the entire beef and sheep industry in NI. The focus must be removed from "perceived sector representation" to a NI industry marketing perspective for the benefit of "NI Beef and Lamb plc."

Your comment that the farmers are "paying for the commission" is hurtful, inaccurate and discriminatory in the light of the voluntary levy contribution being made by processors. It clearly again displays you 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 does nothing to recognise the strides and efforts that all parties have made to achieve a consensus and progressive benefit for the NI industry. It demonstrates that your Committee has a narrow and prejudicial view of how the LMC is currently operating and what has been achieved. It appears your committee is more interested in divisive activity of those relationships that many have worked hard at establishing. It also ignores the fact that the farmers are the largest and main beneficiaries of the Commission's activities.

The fact that your committee is determined to make recommendations on the future of this industry, but still has not taken up our invitation to visit any meat plant to see at first hand what is involved in the day to day marketing of NI Beef and Lamb, just further confirms these opinions.

committee for agriculture and rural development
inquiry into the livestock and meat commission

Further to my supplementary response of 15 May 2001 on the Committee Inquiry into the LMC, I attach below some information that backs up the need for education on the use of red meat in a balanced diet and justifies the emphasis that the LMC are directing towards schools and teachers.

It is well recognised that people in the UK just do not eat enough grain in their diets and there is also a very big interest and swing to a Vegetarian diet. (Almost with religious fervour) The Vegetarian Society of the UK says:

" There are currently about four million vegetarians in the UK, representing some seven per cent of the population. Amongst younger people, that figure rises to 12 per cent. It is estimated that a remarkable 41 per cent of people in the UK are now including far less meat in their diet. In the UK alone, approximately five thousand people each week are choosing to give meat a miss and join the veggie revolution. "

· 5000 people a week in the UK are joining the veggie revolution and dropping meat completely from their diets.

· There are about 4 million vegetarians in the UK - 7% of the adult population.

· In the last ten years, the number of vegetarians in the UK has more than doubled. http://www.vegsoc.org/21cv/ and http://www.vegsoc.org/

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

The Northern Ireland Council of the National Beef Association is once again grateful for the opportunity it has been given to present a submission to the Committee for Agriculture and Rural Development.

It apologises for failing to meet the deadline. It always intended to do otherwise but was continually sidetracked by crises in the anti-Foot and Mouth Disease efforts both here in Northern Ireland and on the mainland.

It is very easy for producer funded lobby groups like the National Beef Association to take casually considered potshots at industry funded organisations like the Livestock and Meat Commission which must, by virtue of its statute, be even handed in its approach to producers, processors, retailers and consumers and demonstrate that it has no bias towards any particular sector.

However like similar levy funded, multi-functional, meat and livestock industry bodies working elsewhere in the UK and in other EU states the LMC has found its most regular critics are producers and it is the NBA's view that if more is not done to avoid this then the potential for the LMC to do more work to the mutual benefit of producers, processors, retailers and the industry will be unnecessarily undermined.

Several influences prevail against the LMC having as comfortable a relationship with producers as it, and the producers, would like. Organisations that rely on levy income, particularly levy taken from farmers who in strict accountancy terms (their labour is entered in the balance sheet as a properly costed item) will not have sold a beef animal profitably since early 1996, are never popular.

Similarly its function as a co-ordinator of the classification service, always a point of abrasiveness because the demotion of a carcase into the lower paid sections of the classification grid automatically results in reduced income from the animal killed, will inevitably and consistently prevent many producers taking as positive a view of the LMC as they ought to.

And the tendency of organisations like the LMC to react to the fact the interface between them and the processor or retailer organisations is very often smoother than it is between individual producers (and at times producers' representatives) also mitigates against the proper development of the fullest possible relationship with farmers.

This is in part the result of the routine antagonism directed against organisations like the LMC by producers who are aggrieved by regular levy offtakes or what they regard as harsh carcase classifications - which is difficult to combat and is an almost permanent obstruction to both casual and constructive dialogue.

However it also reflects the relative ease with which the LMC can communicate with small, tightly knit, groups of single interest processors or retailers compared with a highly fragmented body of 110,000 farmers which are in turn divided by their speciality (beef, pigs, sheep) or by their location (LFA breeder or lowland feeder).

(The fact that the entire redmeat processing sector in Northern Ireland is almost entirely covered by just five slaughter companies, operating almost exclusively through a single umbrella organisation, NIMEA), emphasises this point.)

The latter is most easily overcome if producers are themselves properly represented through their own organisations - of which the Ulster Farmers Union and the Northern Ireland Agricultural Producers Association have been longest in existence - and these are able to keep their members fully in touch with LMC strategy and other industry thinking.

(As an aside the NBA would point out that although it represents specialist beef producers across the Province and is recognised by both DARD and yourselves as a point of consultative contact for the beef sector, it has still to be offered a place on the Red Meat Strategy Group and the FQAS Industry Standing Committee - even though it has twice put in requests through the LMC to do so.

It regards this as an easily remedied failing and, for the reasons outlined two paragraphs earlier, would like to its ongoing request to represent its members on these two committees to be received positively by the industry and its administrators.)

However the NBA believes that if the LMC could be separated from its current classification function, or a method was found of reducing the aggravation that surrounds the current classification process, it would find it easier to communicate more effectively with producers.

Similarly if its income could be secured other than through a levy paying process there would be comparably positive results - although this would be more difficult to achieve.

But perhaps the most urgent challenge facing the LMC in its bid to enjoy higher regard from producers would be for it either to prove that the producer perception it is "too cosy with NIMEA" is not justified by identifying a range of strategies that openly demonstrate this is not the case - or if after due self-examination it accepts it may have allowed its relationship with the meat side of the industry to assume proportions that are unfair to producers, to take steps to correct it.

Foremost among these would be to re-arrange its Board so that it has fuller farmer representation, make sure the farmer representatives are genuine full time farmers, and that the method in which the LMC functions puts farmers on its Board in a position to influence LMC policies in a manner that correctly reflects the weight of the sector of the industry they represent.

It is assumed that if the Board of the LMC is re-vamped that it would contain at least four full time farmers, all of them holding full voting rights so their representation of their sector was real and not either flimsy or a facade.

It must also be pointed out that the LMC's unbending enthusiasm for deadweight purchasing, which is still reflected in its lack of interest in the function of the auction system, is seen by many as one of the principal reasons for the now institutional absence of price competition for Northern Ireland's prime cattle and the reason prices paid for prime cattle have been persistently lower than those realised elsewhere in the UK for the past five years.

It is the NBA's view that the LMC's reputation with producers would immediately improve, to the benefit of both parties, if it set out to encourage more competition for prime cattle.

This welcome development would be advanced if it quickly substituted its current, generalised market summaries, with an advance listing each week of the prices to be paid by named factories against the EUROP classification grid along with their routine premiums, penalties and deductions.

The NBA firmly believes that if an organisation like the LMC is performing well and is successful in pursuing policies which work to the equal advantage of all sectors of the meat industry (including the consumer) it is worth supporting and that a really successful organisation would deserve even more support.

In other words it would encourage producers to take the view that if the LMC is doing a good job it would be wrong to resist a levy increase and that in certain circumstances it would be sensible for farmers to volunteer additional funds on the basis that a relatively small investment that is well used should generate an easily identified and substantial return.

Unfortunately it believes the current mood among producers towards a levy increase is decidedly negative - not least because of persistently low incomes which in return reflect persistently low prime cattle prices.

In these circumstances the NBA welcomes the prospect of an income contribution from processors who, without putting to fine a point on it, have enjoyed considerably better fortune since 1996 than the producers who supply them and who up until now have also benefited from a range of producer assisted LMC efforts - including attempts to secure improved classification, efforts to counter the influence of the Holstein in beef production and of course promotional activities which have encouraged beef consumption within the Province - without making a direct input to the fighting fund.

However there is genuine concern among producers that if processors are required to make a levy contribution it will immediately result in a matching, cross the board, reduction in the price of prime cattle and they will end up paying an LMC levy twice.

In view of this the NBA would suggest that alternative ways of securing processor funding should be found and that these should be paid in direct proportion to profits - although it understands such a method may not be as straightforward as it could be because some slaughter companies have recently revoked their plc status and their profits are no longer open to public scrutiny.

Running a classification service and maintaining regular good relations across a broad band of primestock finishers are contradictory practices - as the NBA has already explained.

It would therefore be better from a public relations point of view if the LMC gave up the service. The manner with which it replaces any lost income or manages its business in the absence of this income are an issue that should be addressed outside this specific consultation exercise.

However it may be to the mutual benefit of both the LMC and the industry if the remit of a similar classification service to that it currently operates was properly defined and then presented to a number of private companies for tender.

In this way the current classification service could be maintained but it would no longer be incumbent on the LMC to manage the operation.

What would be most likely to happen would be that entrepreneurial elements would recognise an opportunity to provide a classification service and employ classifiers currently acting under LMC instruction to continue the current style of service under different management.

The NBA believes that if the service was put out to independent operators for private tender (they were paid by the factories not by the LMC) that, for the sake of consistency and ease of management, just one company should take over the entire day to day operation of the Northern Ireland classification service.

However it also thinks that the LMC could begin to improve its position as neutral body operating without bias on an all-industry basis if it took on the role of inspector, was in charge of the disputes procedure, and employed authorised master-graders.

This position would allow the LMC to keep a close eye on how classification was being conducted (without itself being directly involved) and be in a position to advise the industry on how classification could be improved through automatic scan classification - for example.

Putting the classification service out to tender and putting the operation in the hands of a single independent company would be preferable to allowing each factory to employ its own classifier as can be the case on the British mainland - although the strength of the system would ultimately depend on the determination of the inspector (the LMC) to make sure all classifiers operate correctly within the templates of the grid system at all times.

In this respect aitch-bone hanging is an impediment because it does not allow post-classification inquests as a result of the audit trail being broken as soon as the carcase enters the chill room.

The NBA believes that banning aitch-bone hanging should be recognised as a legitimate point for consideration if there are continued suspicions it is masking poor classification.

It also concedes that as long as classification remains a subjective exercise in which carcases on the margins of a classification grid may or may not be moved up or down depending on the grader's perception at the time there will inevitably be criticism and disputes.

It believes that automatic scanning as tested in the ROI should be introduced as a replacement as soon as possible. In-abattoir trials in the Republic showed that just as computers can beat most people at chess the automatic scanner could classify carcases better than most graders,

However it marginally failed to beat the master graders of the ROI on fat cover classification although it more than held its own on carcase conformation.

In our view this must mean that automatic classification is almost ready to replace individual graders on a commercial basis and that the introduction of suitably secure scanning machines run by independent operators should be encouraged at the earliest possible opportunity.

Another refinement would be to simplify the payment system by reducing the number of grades. There is a strong argument to suggest that current payment grids are much too complicated and help to generate unnecessary confusion.

The NBA would suggest that they were reduced to U, R, 0+, 0- and P for conformation and 4, 3, and 2 for fat cover.

The NBA would like to play a full part in the Red Meat Strategy Group and the FQAS Industry Standing Committee but is prevented from doing so because the groups themselves determine which organisations are represented and the current incumbents, NIMEA, the UFU and NIAPA, have twice rejected representations by the NBA to take a seat at the table.

It would be fair to say that the Association is both mystified and dismayed that it can be prevented from taking a consultative place at an industry meeting by other industry representatives. It believes it has a contribution to make, would like to make it and would hope that if it re-applied to take a place on both committees the barricades would be lifted.

It is therefore impossible for the NBA to comment with any authority on any aspect of the LMC's red meat promotion activities

Nevertheless the NBA supports the principle of the Farm Quality Assurance Scheme because it recognises it as a valuable tool with which to sustain purchasing interest for Northern Ireland beef from British supermarkets and also as a useful lever through which to regain entry to Continental supermarkets when the EU's export ban on NI beef is eventually lifted - particularly now that market security acquired as a result of previous campaigns will have been undermined by FMD.

However it is disappointed that the commitment of most beef producers in Northern Ireland to farm assurance is not reflected in the price for prime cattle, which lies well below the UK average, and would hope to see the effort made by producers to meet FQAS standards to be quickly reflected in a positive premium for farm assured cattle - which by definition are the only animals qualified to provide beef that is sold into high standard and demanding markets.

Unfortunately farm assurance qualification is currently presented to producers as a means of avoiding a £12 per head discount - which the NBA thinks is completely the wrong way round and carries more than a hint that the dominant factory concern that ex-farm prices should always be as low as possible has greatly influenced the way in which the LMC has presented FQAS to finishers.

The NBA would also like to see a suitable proportion of LMC funds be directed into the promotion of auction markets and underline the useful function that the auction system plays within the beef industry in the Province - not least being an efficient assembly and distribution point for all types of store cattle as well as offering open price transparency at its primestock sales.

The NBA sees the current composition of the LMC Board as the most visible example of its fundamental weakness. It is an organisation that has a wide interface with farmers through its classification service, FQAS, its efforts to assist in a variety of downstream projects and of course its reliance on a producer levy for a significant portion of its funding.

However even though the LMC claims to have producers on its Board it would be difficult to describe either of the two current incumbents as a typical full time farmer. Furthermore the Association also feels that even if they were replaced with candidates regarded by mainstream farmers as more suitable producer representation would still be disproportionately low when measured against that enjoyed by other sectors less involved with the LMC and its activities.

This underpins and encourages the persistent complaint from grass roots farmers that attitudes within the LMC lean too far towards the meat trade in particular and does not take enough cognisance of working farmer attitudes because working farmers are not included among their representatives.

It is the NBA's view that the LMC Board should be expanded from seven to nine people and that four of them should be full time producers - and not, as is the case at present, individuals too easily described by critical farmers as being too deeply involved with the meat industry (either in the past or at present) and too easily seen as unrepresentative of the full time working farmer.

If the LMC Board was raised to nine and its composition was altered so the two additional members were working farmers the NBA believes this would quickly result in the LMC being subject to less routine criticism from producers and it adopting policies which although still suitable progressive much more likely to be in tune with grass roots aspirations.

The NBA at present has no involvement in the appointments process within the LMC.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

I would like to thank you and your colleagues on behalf of the Committee, for appearing before them on Friday 11 May as part of their Inquiry into Certain Aspects of the Livestock and Meat Commission. The session was very useful and will help the Committee considerably when they come to consider their final report.

1. The levy charge in N. Ireland is significantly less than that in Gt. Britain. In GB there are two elements to the levy - a General levy and a Promotional levy. The slaughterhouse pays 50% of the General levy while the producer pays the balance of the General levy and all of the Promotional levy. It could be argued that a similar approach in N. Ireland would level the playing field in terms of funds available for promotion, which would ultimately benefit the N. Ireland producer. What is your organisation's opinion on this?

2. One of the reasons you give for producers' reticence for increased levies is the persistently low prime cattle prices. Why in your opinion are prices so low?

3. The gross income for the Commission in 1998/99 was £2.46 million. What do you believe would be an appropriate funding level for the LMC regardless of the source of income?

4. One of the recommendations of the quinquennial review is to have levy rates reviewed annually by the Commission in consultation with producer and processor organisations. What is your view on this?

5. You mentioned putting grades together in some circumstances. Could you clarify this and say what benefit you would see in reducing the number of grades?

6. You referred to error rate in the current classification system and touched on the subject of electronic classification. Such objective classification, if/when further developed to a reliable degree, is one possible way to address the perceived inconsistency in classification as well as the problem of independence. If instigated, this will initially mean an investment in equipment and training etc. and will require an organisation to manage the operation. Could you outline how an operation could be best managed e.g. who should fund it, who should manage it, how much should the service cost the producer/processor and should the LMC still receive finances from the service?

7. Reference is made to the Red Meat Strategy Group and the rejection of a place on it for your organisation. Farmers are represented on this group already by the UFU and NIAPA. Why do you feel it is necessary to have more farming representatives on the Group?

8. You say that it is impossible for you to comment on any aspect of the LMC's red meat promotion with any authority. However you must have an opinion on whether or not the promotion of meat co-ordinated by the strategy group has been to the benefit of your members. (a). What feedback if any have you received from your members concerning the promotion of their meat? (b). What in your opinion should be the priorities for the LMC in relation to their promotional and marketing work? (c). Are there aspects of their promotional/marketing programme that you feel do not represent good value for money?

10. Would it be beneficial if the LMC held more direct and regular consultations with producers e.g. in an open forum so that there could be more transparency and debate on LMC Board decisions?

11. You mentioned that LMC members should only receive out-of-pocket expenses in respect of their duties as members. Do you think that that, and the current procedure for making appointments and the rewards for taking up a position on the LMC, can attract appropriately qualified and experienced people? If not, what would you suggest?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

committee for agriculture and rural development
inquiry into the livestock and meat commission

The National Beef Association regrets that it was unable to respond to the secondary written questions raised by the Committee in the time span it preferred. Once again the problem was the many demands on resource raised by the continuing FMD crisis - particularly in mainland Britain. We hope you are able to accept our apologies.

1. The National Beef Association is not convinced that mainland producers benefit from the promotional levy they pay to the Meat and Livestock Commission.

The introduction of this funding has made the MLC less hands on in livestock, meat and general agricultural terms than the LMC is at present and much more of a promotion orientated organisation.

It is our view that Northern Ireland's beef farmers would prefer the LMC, which is much 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.

The NBA also feels that mainland beef producers benefit less from their promotional contribution than they ought to because EU constraints on the management of the marketing funds require them to be aimed at generic promotions rather than concentrate on beef produced specifically from GB.

This not only means that generic MLC beef promotions lift the consumption of imported beef (indeed because GB is only around 75 per cent self-sufficient any rise in consumption as a result of a successful promotion automatically means an increase in imports) but also that it is impossible to use farmers' money to encourage premiums to be paid for GB beef because it is against EU law.

We would also suggest that because 80 per cent of Northern Ireland's beef production is sold on the mainland that there would be little point in spending more money on promoting generic consumption in Northern Ireland and that the money raised by GB farmers for the MLC is doing more to help the consumption of the NI beef on the GB market than money raised and spent by the LMC ever would.

Similar arguments might apply to the promotion of beef in Continental EU countries when export markets are re-opened - although it might be both prudent and sensible for the LMC to have funds on hand to assist with the promotion of NI beef in specific retail locations.

In this respect the short term question is whether there are enough funds on hand for the LMC to cover this expense, especially when NI exports need to be re-launched, or whether it might need more funds on a temporary basis.

If the latter is true it could be assisted by factories selling their beef to specific retail outlets or by special NI regional funds that might be available for this type of short term promotional work.

In the longer term however it may be necessary to re-examine the LMC's promotional structures and strategies in the light of future innovations of the type we have outlined in our response to questions 7 and 8.

2. An essay could be written on this question but the basic reason is that NI beef producers suffer from lack of price competition made possible as a result of a small number of large processors seeking out similar types of cattle to supply beef sold onto a restricted market without acknowledging that producers have a right to enjoy a fair share of the beef industry's overall profits.

A fundamental improvement in producer returns had been expected when NI beef could once again be sold to a wider range of specialist retail outlets on the Continent and this on its own may have been enough to restore producer incomes to something approaching reasonable levels.

This may still happen but since the eruption of BSE problems on the Continent last November the EU beef market has become hugely oversupplied and an overnight leap in NI prime cattle prices immediately after the resumption of exports, which should be possible from late 2002 to early 2003, is unfortunately less likely now than it was.

The NBA has consistently accused NI meat factories of operating a price cartel that creates excess profit for themselves but greatly diminishes producer incomes and still believes this to be the case.

Evidence that NI cattle are under priced compared with similar animals produced elsewhere in the UK and sold into the same retail markets is overwhelming - and the routine protestations put up by the processors in their defence are thin in substance and loud on rhetoric.

The Association would like to encourage the NI authorities to thoroughly examine this issue but is disappointed at the lack of enthusiasm for this that exists within the Department of Agriculture, yourselves, the LMC, the Ulster Farmers Union or NIAPA and suspects that for many reasons there is little or no political will to launch an investigation and that there is therefore unlikely ever to be one - unless there is an overwhelming shift in their or your position or the EU authorities can be persuaded to take an interest.

The NBA has therefore been forced to accept it cannot on its own succeed in having a much needed enquiry into excess factory profits and unnecessarily low cattle prices instigated because those in charge appear to prefer to keep the doors tightly shut but nevertheless regrets that its recent efforts to bring these issues into the public domain have failed and still believes that NI beef producers have a right to expect this problem to be properly addressed.

Farmer profits could be slightly increased if their costs could be reduced as a result of their management becoming more efficient. In this respect research work undertaken on a number of fronts by agricultural colleges is to be welcomed.

However we fear that the future for the NI beef industry is more likely to be driven by the hunger of factory owners with spare packing capacity (currently it is roughly twice as high as slaughter capacity) to import either sides or primals for de-boning and packing from a range on non-NI sources than it is by their hunger for live NI cattle for slaughter.

This means that factories will continue to demonstrate that their greatest enthusiasm is for beef (from whatever source) rather than live NI cattle and as a result the payment of realistic prices for live cattle will be of only secondary interest.

If this is correct then Northern Ireland's cattle numbers will continue to dwindle and the income of the LMC with it unless the LMC can demonstrate in the most vigorous and positive terms that it stands on the side of an NI beef industry that is based on live NI cattle rather than imported beef primals, provoke a rise in producer profit, and as a result of this give producers both the will and the financial capacity to be able to volunteer a lift in LMC levels.

3. The NBA believes that the income of the LMC and the work it undertakes at present are roughly in balance - as long as expected annual cost increases are taken into account and provision made to maintain its incomes in real terms.

If however the LMC wished to put forward a plan in which it demonstrated both the need for, and its capacity to meet, new initiatives and programmes which would be to the overall benefit of the NI beef industry, especially including the farmer, then the possibility of funding it with additional money from non-farmer sources should be thoroughly examined.

4. As long as LMC levy payments are a source of aggravation between the LMC and producer levy payers there should be no annual review of levy payments because it would only lead to near permanent hostilities which would further undermine the relationship between the Commission and a principal source of its funding.

It would be much 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. This is an idea best discussed on an all-industry basis but the principle behind the NBA's observation that there is a need to reduce the number of classification grades is that the differences between them are too fine - which is in direct contrast with the price penalties which are significant and give factory owners even more opportunity to pay less for cattle that are entirely suitable to them than they ought to.

For example it can be shown in meat yield terms that there is very little difference between an R3 and an O+3 carcass yet the latter is penalised by 6p per dwkg - or around £19 per animal.

Or that in retail presentation terms there is very little practical difference between an R3 (on which is hinged the base price) and an R4L (which carries slightly more fat) which once again is penalised by 6p or about £19.

The NBA would suggest that there ought to be a target specification which includes R3, R4L and O+3 (and perhaps one or two other grades like a U2 or an O+4L) which are all paid the same price.

By the same token we think there should be no differential between U3 and U4L carcasses which at present is 6p or £19.

Basically the NBA is saying that the proliferation of grades is unnecessarily fussy and is of no overall benefit to the producer because it gives processors an opportunity to discount the value of perfectly acceptable carcasses and make more profit at the expense of the farmer.

And that this would not be as easy if the industry agreed on four or five groups of grades that were subject to payment differentials instead of the 10-12 price/grades that are listed at present.

6. The NBA thinks that the operation of a national classification service should be put out to tender irrespective of whether classification is determined electronically or by human assessment and that the service, which should be operated by a single company, should be inspected by the LMC.

We would suggest that a classification/weighing charge of £1 a head would be fair because actual cost is likely to be in the region of 75p. Factories killing less than 75 cattle a week should be exempted from classification requirements - unless a solution to the higher cost of overseeing such operations could be found. Some of the training cost for electronic classification could be met by the successful company and some met from a one-off government assistance programme.

The cost of installing the equipment should be met by the factory and the LMC should be given central funds by the government to cover the cost of its inspection. It would be most important that the LMC was not paid by the factories to cover the cost of its inspection service because this could disastrously undermine its independence.

7. Sensibly put views from a range of individuals or organisations will always stimulate discussion and encourage a level of debate more likely to produce the correct result.

The NBA is made of individuals with slightly different views to those in NIAPA or the UFU and therefore are being prevented, at present, from making informed contributions which the Red Meat Strategy Group ought to consider both legitimate and welcome.

The Association would also argue that its 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.

It must also be said that the Committee for Agriculture and Rural Development appears to appreciate the need to consult as widely as possible within the beef industry and beef industry matters - and therefore includes the NBA in it consultations.

We would hope that members of the Red Meat Strategy Group could be persuaded to take a similarly proper position.

8. It is difficult to comment on promotion strategies in detail if you are not aware of the strategy behind their implementation. With this in mind the NBA's comments must be regarded as uninformed.

However NBA members do 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 Irish beef to sell more of it as an added-value branded product and less as a bog standard, discount led, commodity.

Indeed the promotion of the greatest possible proportion of Northern Irish beef as an added-valued product on the British market, and on the wider export market when it is at last re-opened, is the only way that current beef production structures can survive because it opens the way to higher priced cattle on the back of higher retail value beef - assuming of course that retailers and processors are prepared to pass back a fair proportion of their profits.

The NBA has therefore no hesitation in recommending this approach as well as counselling the Committee and the LMC to recognise that in Northern Ireland in particular equal or even 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 - although this would of course require that the processing of the beef and its cooking were of a standard able to deliver the beef to the consumer in a condition that would not disappoint them.

9. Beef is a product that can be easily damaged at any point of the production, processing, retail or 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.

With this in mind the NBA would suggest that the LMC should make the securing of an integrated national system its priority and pursue it through a national brand that was subject to strict quality monitoring and such strong disciplines that farmers, factories, and retailers who fell short of its requirements were no longer allowed the privilege of being members of the brand's production chain.

This would require the establishment of production blueprints for farmers, processing protocols for the factories that included strictly monitored bone-in maturation periods (this could be demonstrated by them having sufficient chill room space to accommodate the necessary number of carcasses) and for caterers, butchers or multiple retailers to demonstrate that they too can meet the handling protocols before they were allowed to take delivery.

Our view is that this is the only way to reverse the creeping reduction of the beef cattle population in Northern Ireland as a result of persistently poor producer incomes and it should be made a national priority - unless it conflicts with the idea some factories have of generating wealth and employment in the Province through the cutting and packing of huge volumes of beef produced in the ROI, elsewhere in the EU or even South America and the government supports the latter.

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

11. After due debate the NBA had decided that the beef industry in Northern Ireland would be better served if LMC Board members received only out of pocket expenses and not a reasonably substantial stipend as they do at present.

In this way they would move from being seen, or perhaps even thinking of themselves, as employees of the LMC and therefore obliged to accommodate its views rather than their own and become genuinely independent representatives of their sector.

The Association dismisses the idea that without financial encouragement the LMC would not be able to attract individuals of sufficient calibre to its Board. Indeed we would observe that, with some notable exceptions, the constitution of the current Board does not provide compelling arguments in favour of current financial arrangements being sustained - and this is in itself a powerful argument in favour of them being scrapped.

It would be depressing indeed if there were not enough community minded individuals in Northern Ireland to represent their sector of the beef industry on the Board of what we would hope would become an increasingly influential strategy co-ordinating body without the lure of direct payments into their bank account.

Indeed it could be argued that the LMC would be more likely to secure the services of free thinking, independent and public minded individuals with suitable knowledge of the beef industry if it rejected current arrangements and opted for an out-of-pocket-expenses-only policy instead.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

The National Sheep Association (NSA) is an independent body representing the interests of U.K. sheep farmers. There are eight regions, each with their own chairman and committee responsible for sheep farmers in their own particular region. All regions have representatives on the main NSA Council and Executive which meets regularly in London or NSA Headquarters based at Malvern in Worcestershire.

N.I. Region Chairman     Ian Gibson         Broughshane
Vice Chairman   Francis CurraghDonaghadee
Secretary           Edward Adamson           Carrickfergus
Treasurer          Samuel Wharry Carnlough

The Sheep Farmer magazine is published bi-monthly (6 issues per year) and is circulated free to all members.

At present no alternative to visual assessment of carcasses Suggest simplify grid into ¾ categories:- (Super) Premium, Base and Penalty.

a NSA feel that funding is inadequate but, unfortunately it is doubtful if producers can afford to pay higher levies. However we feel that a processor levy may be paid indirectly by the producer.

b Processors should be involved in promotional work as they benefit from increased sales.

c Is there a place for joint LMC, processor and possibly Bord Bia (may be too political) to promote branded lamb?

d At present, levy is collected on 559,100 lambs If the levy was collected on number of ewes (1,332,600) it would mean all producers contributed to LMC rather than only those who sold lambs deadweight in N.Ireland. The larger number would also increase potential levy collected.

e If N.I. lambs were ' branded', processors could pay for the use of the Brand Label.

f Could money from Rural Development Funds siphoned from modulated S.A.P. payments be used for LMC activities?

g LMC does provide several services e.g. FQAS etc. where an impartial body is required to operate such services.

a Human nature decrees that producers will always consider their lambs are better quality than the grader. Some inconsistency in grading causes dissatisfaction amongst producers but we do understand that the graders are only human and cannot produce as exact a measurement as a mechanical method would. Unfortunately we do not know of an accurate and consistent mechanical method of grading at present, but would be interested in seeing such a development.

b From comments and observations made by some of our members there seems to be a different standard of grading in The Republic of Ireland. It would appear a more lenient set of standards prevail in the meat plants in The Republic.

c It would be helpful if LMC provided information on individual grades e.g. U2, U3, U4L etc. as well as the grading groups e.g. E,U,R's and 2,3,4's. Sometimes LMC information may be out of date.

d Would a star rating system indicating eating quality be useful to give a guide to the consumer rather than the EUROP system which is really only a guide to the yield of meat? We believe this system is in operation in some countries (Australia).

a LMC agreed a programme of in store sampling opportunity for Dutch consumers to taste lamb from N.Ireland in 2001. Doubtful if this can proceed due to FMD.

b LMC state that promotion of lamb at ANUGA Trade Show in Germany proved successful. How did they measure their success?

c Households in G.B. purchase a much higher percentage of lamb than in N.Ireland. We need to promote lamb better on our home market. Why is lamb so rarely seen on Hotel or Restaurant menus?

e Is there a place for joint promotions with The Republic of Ireland (Bord Bia)?

f The NSA does not and has not been asked to take an active part in L.M.C promotional activities but LMC has taken part in NSA activities.

g As stated earlier, because of limited funds available to LMC the sheep industry probably does get good value for money.

h More needs to be done to encourage initiatives like The Ulster Lamb Groups and branding of lamb.

i LMC is not good at communicating and explaining their activities to producers which creates some resentment. We need more feedback and communication between LMC processors and producers.

j The M.L.C. in G.B. give assistance to pedigree breeders in promoting British Pedigree Stock at overseas events. NSA feel that N.I. breeders (both beef & sheep) have stock capable of competing and improving animals anywhere in the world and would recommend that LMC should look at ways in which they could help our pedigree breeders.

k LMC should look at innovation required within the industry. Examine eating quality health benefits of lamb and new ways of preparing and eating lamb.

l The sheep industry is a price taker rather than a price maker. LMC should examine costs and highlight returns required by the producer.

m NSA appreciate help given by LMC to The Ulster Lamb Groups in co-ordinating and subsidising their presence at The SIAL Food Fair in Paris and to Meadow Valley Farmers in G.B. Also for their role in the success of the lamb carcase competition at The NSA Lamb 2000 Event.

a NSA is not very satisfied with the composition of the LMC Board, bearing in mind that LMC is funded with producers money.

Chief Executive of a refrigeration company
An employee of ABP Newry (Meat Plant)
Manager of local Leader group, Chairman of NIAPA and part time farmer.
Butcher, publican and boxing promoter.
Director of Lean & Easy lamb processing company and part time farmer.
Director of food processing company

We have no complaints about any of the board members but we feel it shows a bias towards processing industry. We feel that there should be provision for a representative from sheep producers and one from beef producers on the board. Alternately, a sub committee could examine and focus on sheep issues only.

b NSA is not involved in the selection of the board members or given any notice of vacancies.

NSA welcome this opportunity to comment on LMC and hope the Committee finds our reply useful.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

1. In any review undertaken of the work of the LMC, what do you consider are the key priorities or most pressing issues for the membership of the National Sheep Association?

2. Could you describe the main liaison arrangements or relationship between the NSA and the LMC? Are current arrangements to the benefit of your members, if not how would you like to see your relationship with the LMC develop?

3. You referred to the need for proper quality grading for the consumer. How do you envisage such a system might operate between the producer, processor and the LMC?

4. You have raised a series of questions with regard to the promotional activities of the LMC. You state that the NSA has not been invited to take part in the promotional activities of the LMC but that the LMC has been involved in NSA activities. Given that you have a range of ideas in respect of marketing and promotions, what type of forum do you consider would be appropriate for such ideas to be communicated and discussed?

5. You make a call for improved communications between the LMC and the sheep industry. Ideally what system of communication would the NSA like to see in place?

6. You refer to the MLC provision of support for pedigree stock in GB. Have any of your members approached the LMC to assess the opportunities for such support? If made available, how do you envisage such support being used by pedigree stock sheep farmers in Northern Ireland?

7. Does the NSA consider that there are any new market opportunities, which could be exploited by the future LMC promotional activities? In contrast are there any market threats, which should be proactively tackled by the LMC's promotional activities?

8. You have expressed concerns about the current make up of the Board of the LMC and your desire for an opportunity to focus on the sheep sector and your submission said that you do not receive any notice of vacancies to the Board of the LMC. What role, if any, would you like the NSA to play in any appointments procedures of the LMC, and what action could you undertake if you did receive such notice?

I would be grateful if you could provide a response as soon as possible, preferably within the next two weeks.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Please thank the Committee for giving the NSA the opportunity to put forward their views on the LMC.

2. At present there is very little liaison between LMC and NSA, but NSA would welcome a closer relationship. It would be useful if NSA representatives could meet with LMC and receive objective reports on LMC activities.

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

LMC should appoint someone to deal specifically with lamb and the sheep industry.

5. LMC should have meetings with the sheep industry i.e. representatives (suggest two) from NSA, Ulster Lamb Groups (ULG) NIAPA and UFU. These meetings would be more productive if they are not too large. Discussion could be more focused and controlled with representatives able to report back to their main bodies.

6. We know of no direct requests to LMC for support to pedigree sector but would welcome the opportunity to do so. A representative who was not bias towards any breed with knowledge of the pedigree sheep industry could promote NI Genetics alongside MLC and possibly Teagasc and Bord Bia the Republic of Ireland. We should keep an open mind and seek co-operation in any corner we can find it.

7. It is the job of LMC to actively promote and identify threats. As indicated earlier a sheep specialist working within LMC would be best placed to tackle promotional activities.

8. NSA would welcome the opportunity to advise on the selection of a board member or even propose a candidate they thought would fulfil all that is required of a board member.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

I have been a beef farmer for over twenty years and have slaughtered thousands of cattle. I believe this gives me the right to submit evidence and my voice, which I am certain is not a lone one to be heard.

I wish to make my comments known directly to this committee about my concerns about the LMC, as it affects me directly and other farmers like me.

The main objective of the LMC is to perpetuate its own existence by ever trying to increase its revenue first and foremost. It has no concern whatsoever for the farmer.

1. The funding of the LMC is thrust upon the beef producer irrespective of whether they support this outdated organisation or not. The levy payers have no input whatsoever as regards the LMC. We should be able to opt out of supporting this organisation which is more a hindrance than a help.

2. We no longer need classification service as it was originally introduced to facilitate intervention buying which has become obsolete. A much better system existed in the past were by the processors used their buyers to buy cattle live in the farmers yard at a flat rate price.

This enabled the farmer to achieve a better price for his animals. By continuation of this grading system the farmer losses out to the processor who uses the grading system to penalise the farmer.

3. The big supermarkets are selling the greater proportion of the meat nowadays and using their own top promotion and advertising agencies, thus making the LMC's minor attempts at advertising very amateurish and totally unnecessary.

Their quality assurance scheme is primarily designed to encompass all farmers, the standards are set so low that anyone could join. The LMC designed the scheme so that all producers are included regardless of beef produced so that the processors would buy into the scheme, thus ensuring the continuance of the LMC.

4. The LMC was only ever a government quango, I have no interest as to whoever is appointed to it, it is my opinion that it should not have existed in the first place.

In conclusion beef producers have seen prices steadily decline over the past six years. As an organisation designed to market livestock by promoting increasing sales of meat the LMC has failed miserably.

I can see no need whatsoever in continuing with the LMC as it has been like a parasite, feeding off the beef industry for too long.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

WRITTEN SUBMISSION BY:
NORTHERN IRELAND AGRICULTURAL PRODUCERS'
ASSOCIATION Ruling Council

We acknowledge receipt of your letter of the 13th March, on the above subject, at our Offices in Cookstown, you will appreciate that it has not been possible for our Association to have normal meetings since the onset of the FMD crisis.

NIAPA Ruling Council met on Tuesday the 3rd of April where this correspondence was discussed. It was clear that the nature of the matters is clearly significant if not also contentious in some aspects.

We are at an immediate disadvantage in that it has not been possible to schedule a Beef & Sheep Committee Meeting in order to ventilate the issues and seek more detailed information, which would allow NIAPA to make an informed submission.

The following points were raised in consequence of the nature of your enquiry. These of necessity are the views only of the NIAPA Ruling Council.

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

2. NIAPA would hold to the opinion that any 'so-called' producer levy would be almost certainly be laid off or discounted against the returns to the primary producer by way of additional charge by the processor.

3. NIAPA has very little information with regard to the funding of the LMC notwithstanding the fact that Miceal McCoy; a former chairman of NIAPA sits on the Board of the LMC.

4. NIAPA Council members are not impressed by the performance of the LMC by any standards, and felt that by comparison to their counterparts in the UK where equivalent prices are known to be up to 22p per Kg above the NI prices in some situations.

5. We are not able to offer information on grading comparisons with ROI or other UK areas at this time but it is beyond any shadow of doubt that members are acutely aware of the subjective nature of grading and generally dissatisfied with the present variable standards.

6. NIAPA members would certainly welcome a mechanical approach to grading, on the understanding that this methodology would be both accurate and fair to all producers.

7. NIAPA would not be in a position to assess the competence or otherwise of LMC staff at this time other than comment upon the obvious subjectivity of the present grading procedure.

8. NIAPA has neither involvement nor feedback with regard to Promotional activities conducted by LMC. Once again Miceal McCoy has not involved NIAPA in these matters. NIAPA 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.

9. NIAPA would not be satisfied that present representation on the LMC Board is either balanced or adequate in terms of producer need. NIAPA would not see a cost benefit to producers in expanding the number of Board members.

10. NIAPA Council would consider it imperative that they be given opportunity to investigate and discuss these issues in much more detail in order to assess the totality of them. We would welcome an opportunity to draw together as many interested members as possible, in order to fully explore and investigate this particular aspect of livestock marketing. We are of the opinion that marketing is a major weakness within the agri-food sector. We would ask at this point for consideration for a further extension of the consultation period until FMD restrictions have been eased.

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
Inquiry into the livestock and meat commission

Further WRITTEN SUBMISSION BY:
NORTHERN IRELAND AGRICULTURAL PRODUCERS'
ASSOCIATION Ruling Council

We thank the Committee for their consideration and fully appreciate the position adopted by the Chairman, in regard to remaining distanced from the current situation which has temporarily overtaken our organisation. We would indeed wish that others would also follow this example of propriety.

The paying members of NIAPA will, by virtue of the authority and process of democratic governance, as laid down within the NIAPA constitution, ultimately resolve all outstanding matters, in regard to proper and authorised representation, regarding the pursuit of the lawful affairs and aspirations of the Association.

Of necessity we had to postpone our 2001 AGM, at the end of February, which we are confident would have finally removed some of the impediments to progress and resolved outstanding matters. We seek only objectivity, not outside interference in matters of representation. Unfortunately our experience has in the main, tended to confirm the latter.

At a well attended NIAPA Ruling Council Meeting, on the 3rd of April, a delegation of four was appointed, to deal with matters arising in consequence of the proposed inquiry into the workings of the LMC. Those proposed and elected were and are, Sean Clarke, Gabriel O'Keefe, Sean Murray and the undersigned. Once again, of necessity, we have been restricted, in terms of not being able to host localised NIAPA meetings to facilitate debate amongst members, on this very sensitive and important subject, as a consequence of current FMD movement restrictions and precautionary measures.

Notwithstanding these immediate limitations in regard to wide consultation we nevertheless welcome the proffered opportunity to discuss and place on record some of our immediate concerns, with regard to what we would perceive to be shortcomings, within the present workings of the LMC.

I am pleased to advise that whilst perhaps we may presently be somewhat disenfranchised we are not disabled and therefore do not require special access facilities.

Having spectated at the earlier 'presentation' by those using the NIAPA name but significantly neither having been elected nor appointed by our Association but otherwise, perhaps, 'pre-approved and strategically selected' by others, whilst also conveniently furnished with a 'pre-prepared written submission', emanating or originating from a 'sitting' LMC director, we are in fact now familiar with the protocol.

We would propose to adopt something of a 'kipling' approach to our analysis of the LMC situation, through perhaps providing more questions than answers, at this point.

What is fundamentally wrong with our livestock industry which seemingly prevents primary producers from having confidence in an organisation (LMC) which is supposedly independent and impartial but in effect is more often perceived by many primary producers as being more aligned with the needs and objectives of the processing industry?

Why do we have such instability within the pricing and marketing structure of the meat industry, as it affects producers, but which significantly, is not necessarily mirrored or paralleled by equivalent fluctuations in the retail sector?

When can we expect to see a focus upon developing and implementing a more orderly and structured approach to primary agricultural production, specifically in regard to livestock farming, which will have the capacity to instil long term confidence and provide economic sustainability?

How long must primary producers wait until they can expect to receive, as of right, a proportionate share of the benefits arising out of the production and marketing of top quality meat products, which have secured and sustained a rising plane of nutrition for consumers over many generations.

Where can primary producers turn to have their long standing problems of industry instability addressed or resolved, when the competing interests of macro economic interest and global commerce seem geared and positioned to erode the very fabric of the primary agricultural community?

Who will have the courage to pursue openness and accountability, in regard to every aspect of commerce, and the totality of wider community need, which are perceived to be both pre-requisite and inextricably linked to ensuring necessary balance for sustainability, throughout the community and the chain?

We would wish to see a truly objective analysis of the present situation, as it currently obtains throughout the livestock industry, with a focus upon true objectivity with genuine commitment to achieving equilibrium, along with the prospect of achieving long term sustainability for the overall benefit of everyone associated with the food chain, including consumers.

LAWRENCE SMYTH
Acting General Secretary and NIAPA PRO (by resolution of the NIAPA Ruling Council 8/2/2001)

[1] The work is performed by 18 field officers responsible for beef, and supervised by a team of 5 senior field officers (MESSRS. Boyd, White, Hill, Shannon, their chief being Mr J Wilson). The field officers are moved every two weeks.

[2] Vet fee amounts to £3.68 per animal and insurance to £3.00 (£4.00 for cows)

[3] This inspection team, conducted by M. Freeburn, consists of 5 controllers (Messrs. McCormick, Hamilton, Hanna, Deighan and Kinney).

[4] Codfat must indeed remain attached up to the point of acceptance when intervention deboning takes place in a cutting plant connected with the abattoir (see Article 17(5) of Regulation (EEC) No 2456/93).

[5] Weight should be given by carcass and not by side.

[6] A single price per conformation and fatclass is obtained by aggregating O+ and O- as well as 4L and 4H on the basis of an arithmetic average.