Committee for
Agriculture and Rural Development

Friday 30 June 2000

MINUTES OF EVIDENCE

Pig and Beef Industry

(National Beef Association)

Members Present:

Rev Dr Ian Paisley (Chairman)
Mr Armstrong
Mr Bradley
Mr Douglas
Mr Dallat
Mr Ford
Mr Kane
Mr McHugh
Mr Paisley Jnr

Witnesses:

Mr H Marquess)
Mr T O'Brien)National Beef Association
Mr A McKevitt)
Mr W Gordon)

The Chairman: ...for this is a very long stay session, we started at 8.30 this morning. We have been going hard at hammer and tongs. You are very welcome, thank you for coming. What we wish you to do is to make a submission to us for about ten minutes and no longer if you can keep to that. Then we will have questions from the members of the Committee and your response for a further half hour, we have 40 minute for the whole session.

Mr Marquess: Well first of all we would to like to thank you from the NBA for inviting us here. I hope we can put forward points that will help our industry. You have all got copies I take it from the NBA of the submission so we will just deal very briefly for I'm sure you would like to ask us a lot of questions and I hope we have answers for you.

The Chairman: We'll not be too hard on you, we are reasonable people.

Mr Marquess: First of all, we need low incidence BSE for Northern Ireland. That is the main point and that is actually not on our summary. We have added quite a few points because that submission was made in a short space of time from GB from our Chief Executive. There is a lot of points that are in Northern Ireland that they don't realise the implications to be honest. The low incidence BSE, as we say, would be in all of our cases I suppose the prime objective, if we can get that it at least it gives us a market. We were told coming in here no mobile phones. I asked the fellow how did he expect us to buy mobile phones with the state the industry is in at the present time.

Greater prime cattle price transparency is probably very high on the agenda. I think that the processors would have - I need to watch what we say here - we are not saying they have created a cartel, but they have made it fairly possible for them all to work under the same price scale. That would be a thing that we need to look at.

Updated costs of production. I would think that not one in 20 farmers know the cost of production of an animal, to be honest, and I think it needs to be looked at closely where production costs should be based -- now I have been to Hillsborough and Greenmount, they base them on their particular costs where they can buy feed stuffs at a discounted price, they can get their silage, they have everything at a discounted price as their budget is so high. They are not really showing the true picture to the farmer how much it costs to produce this animal. I think if we do base a cost on that and try and work out a system whereby we need say a 10p profit say and an animal costs £1.70 a kilo to produce, if we have any means of forcing the processors into paying say £1.80 to allow us to have a profit. I know it is going to be a hard thing to implement, but I think it is worth looking at.

Encouragement for more prime cattle through the live auction marts. Now the Department of Agriculture, I think, and LMC have pushed us into a sense of security, lulled us into a sense of security whereby we send animals now to the processors, they can give us exactly whatever price they want where if they were forced to go out to the live cattle auctions to buy them and I know it is a bad time to do this because there is too many cattle and not enough markets, but I think that farmers need to go back and look at the system they were working on a few years back where they go to the live auction marts and that raises competition. If you allow the processors and they have got into the situation when the market is not there they can just give you whatever price they want. We met the Office of Fair Trading in Newcastle in November and tried to bring it to their attention and they are working on it at the minute, but it is hard building up a case because farmers are not wanting to come out openly against the processors because they could be blacklisted very easy. Northern Ireland is a very small community and it would be very easy for one plant to say "Don't take that man's cattle", and in that case they are afraid.

Imports - the standards of imports are nothing up to the standards that we have to produce. Either the standards of imports should be raised or else imports should be stopped unless they come up to our standards. The price of Sterling is against us, no doubt and that lets imports come in.

We need easier access to the GB market for live cattle for slaughter. I know some of our members who took cattle across, there is a 25% differential on some occasions where they were making £30 to £35 a head more when they took their cattle across after expenses were paid. They felt the Department hindered them going across by protocol, TB and Brucellosis testing where cattle were going to a plant across the water, if they were going directly to that plant we don't see any necessity for them to have a TB or Brucellosis test because they are tested at the plant anyway and this would show up.

We need to raise the clean, green image of Northern Ireland. The resources has put into Northern Ireland farming. The little red tractor is a GB logo that in our instance, I think that we are lowering ourselves and I have stated this to LMC who don't agree with me. I think we are lowering our standard if we get low BSE incidence by accepting a logo of a country which is not up to the same health standards at present as what we are. I think we should be promoting Ulster beef or Northern Ireland beef or go under the name of Green Fields. I think we must look at our own brand.

I would think if we could get quality of cattle improved we could have buyers from Spain and Italy which would, if they come across as they have done in the Southern Ireland, they could probably raise the prices of our finished cattle by making a scarcity. We need that, that all ties back into low BSE incidence.

There is too much bureaucracy and paper work attached to farming. There are people making laws over in Europe at the present time who don't understand the practicability of implementing them, it is impossible in some cases. Labelling is one good instance at the present time.

I think the Department has placed a lot of extra costs on us by health and safety towards cattle clipping and things like that where at the present time we have noticed that the Department are already looking for methods to protect their own vets from coming into close proximity with cattle because they have had one or two accidents. They don't seem to worry about the implications of the farmer getting kicked or hit up the face with a pair of clippers, they don't seem to worry about that, it is all one sided, too one sided, it doesn't seem to matter about the farmer any more. Tagging has been a failure which was thrust upon us too. Torn ears 30%, some farmers would tell you their cattle have lost tags, others 20%, some 10%. Things like that place an awful cost on the industry. Another thing which we could look at there maybe is punching by computer where it would mean that a farmer wouldn't need to bring his cattle into close proximity and have the chance of a Department official getting hurt or himself getting hurt. It is an extra cost to bring cattle in and extra time for punching. When computerisation is as good as they say I can't see any reason why they can't do it that way.

Labelling is going to throw another extra cost on us, another £25 per head probably. That is a thing ongoing at the minute, we will not go into detail there.

Semi-retirement scheme or an opt scheme as we talked about maybe four or five years ago. We suggested at that time that maybe a quota could be phased out over a period of three years where a man could get out of farming, still hold to get money from his quota for say three years. And a national reserve for quota the same as the milkmen have, his quota could be paced into that national reserve if he wanted to come back into beef farming after his three or five year period or whatever, his quota would be there for him to pick up again and it could be used meantime, if somebody else -- the problem is no young farmers coming into the industry.

90 head limit. Again another -

The Chairman: If you could come to a conclusion now, we want time to ask you some questions.

Mr Marquess: Coming near the end. The 90 head limit, again we will not go into detail on that there. Road signs are a thing, in farming diversification at the present time you can't put up a road sign, DOE won't let you put a sign up if you want to diversify, you can't tell people you are there. Another point I would like to see implemented would be to keep farms and farming families, there are too many developers coming in buying up lands to make new villages and things like that. I thought the proposal that was put forward was a very good one, by the way, of a house on the farm, I think you need to look at it and make sure it is kept near the roadway where you can sell it off without disturbing the farming activities.

Scientists should not be allowed to speculate at the expense of the industry. I think that has cost us an awful amount of money, scientists speculating, telling us what's going to happen.

On the last two now. Farmers have become the supermarkets slaves and Government has allowed them to become that too because supermarkets and customer wants are sometimes thrust upon us. Customer wants are not really always what the customer does want, it is a perception that is put into their heads.

As regards DARD, the sooner farming pays out all subsidies should be paid so the banks can get their money sooner. There is has been a whole back in all of that. I think DARD should also show an example to farmers by reducing spending in colleges. There is a big percentage of the budget that goes to colleges at the present time and I'm a neighbour of a college and I notice when it comes to a certain time of the year it doesn't matter what the money is spent on it has to be spent, I think that's so they can get their budget topped up for the next year. I think that is wrong, if they have too much money it should be pulled back and put into something else. There is a perception now that DARD has turned from being helpful to farmers to hindering processes by bureaucracy and I think we should have a meeting like that here  - that's the end of our submission   - I think we should have a meeting like this here every three months or not as high up as that maybe, but with an Agricultural Committee of some standing, say over three months to bring us up to date. Thank you.

The Chairman: Thank you very much. My colleagues will want to ask some questions, but you did start off with a matter that causes us great concern. I notice, of course, it is in your submission, the most common complaint levelled against the factories in Northern Ireland by the finishers who supply them is that they operate a purchasing cartel. I think that this is a matter that causes us all grave concern because there was a funeral undertaker in Belfast when I came here 54 years ago who had a big sign up: No ring, no combine, the Wiltons, but I tell you there is a ring and combine we feel in this matter. The man that primary produces and puts agriculture wheels in motion is the farmer, but everybody above that is getting out of him but he is not getting out enough to cover his costs. That is where we really are in this whole situation. So we would be pleased to have more information of what you know to be happening. You don't need to give it in public, but you can supply it to us, we can have an inquiry into it and look at it because I think that has to be done. I think there are many here around the table, I can't speak for this Committee, I speak for myself, but there is other members of this Committee who feel sore about this as well. I think that we need to keep that in mind. I want to try and get my friends in. Ian junior?

Mr Paisley Jnr: First of all, you are all very welcome. One of the things that I would like you to consider because your submission has an awful lot of detail in it, is if we don't get low BSE status what is the fall back position? That is absolutely essential, that our minds are focused on that as well, that there are alternatives for the industry. Also this question of the cartel, has the Association put its mind to try to address that by way of establishing farm co-operatives where the farmer, the primary producer becomes the man in charge of all this and cut out the middle man who actually is doing an awful lot of damage to the profit margin that the farmer actually can make?

Mr Marquess: Could I answer that second question first, maybe Henry would like to talk on the other one? The problem here is that there is five processors I think who own seven factories, now Ballymena was a good example as you know that was sold over to a private processor. That was a place where butchers had an opportunity to take their own cattle and get them slaughtered. It still can be done, but we feel that they have closed the gap completely and only for small abattoirs opening up -- you talk about co-operative, where does a co-operative go to get their cattle killed? You know, they are in a trap, unless they build an abattoir there is no place really where they can go. So that leaves the cartel, if you want to call it that, that they have limited the farmer's capacity to get rid of his cattle.

Mr Paisley Jnr: As a butcher, do you find that the consumer is actually interested in quality and welfare of the beast, or are they only really interested in the price?

Mr Marquess: They are interested in price, a bit of quality. Yes, you need quality, price. They are not interested in health standards at all. Consumer council, to be honest, I think they have words put into their mouths by the supermarkets.

Mr Paisley Jnr: Is that not an indictment on the whole agricultural policy that we are currently pursuing in this country? I mean, the Government is pushing standards, welfare and everything else on the industry, you are saying as a man who is there at the coal face that the consumer isn't interested in these things?

Mr Marquess: No-one has ever asked me at any time did a sow come from a stall, is that an organic beast.

TheChairman: They know the gender of a sow, but they don't ask when they go into bullock meat is it male or female, they don't ask those questions.

Mr Marquess: They are not interested in that, I think it's a total waste of money doing that. I think you must have quality. You can sell on quality but you must have a sort of half decent price too. There is a big margin of people out there that haven't the money. In Northern Ireland at the present time it is get tighter and tighter all the time in the farming community because I was always told from I was a child that if a farmer had no money nobody in Northern Ireland had any money. It seems to be quite true apart from developers.

The Chairman: Right, we come to Boyd?

Mr Douglas: Thanks Chairman, one of your proposed solutions is to increase the sales of cattle through the auction system which seems difficult at this time when the auction markets are disappearing. Why is this a solution? Why is the current through put so low and how would authorities change so we could have more stock sold in the auction market?

Mr Gordon: Again, it comes back to we are down to such a small number of factories here. On the mainland the auction market system works well and it actually gives a price guide to what the factories should be paying. Because our auction marts have got so low here and so few in numbers we actually have no idea what the price we are capable of demanding is, it is really what the factories decide to give us. That is why we would be keen to see a viable auction mart system going again.

Mr Douglas: Those cattle sometimes are sold at the market and then they go to the meat plant. These people have a big influence really.

Mr Gordon: Well we are sort of brought up in farming to get away from the markets because if somebody bought your bullock at market and took it to the factory he was getting a commission on it so you were better to go to the factory. But definitely on the ground farmers feel if they take it to the market and are not getting a fair price they can take it home again. Once the animal goes into the factory, with the price, you can't do anything with it.

Mr Douglas: Basically you need markets to keep a fair price?

Mr Gordon: You need both

The Chairman: Thanks.

Mr Marquess: Could I maybe add a wee bit there? A very interesting thing happened at Christmas at the fat stock sales. The supermarkets didn't -- whenever Tesco's came in here and Sainsburys came in at the start they bought all the top cattle, they bought all the prize winners. Last year that didn't happen. And I saw that as they had got the processors into their grasp, got the farmers into their grasp, they didn't need to go out and give a price, those cattle were all bought by locals, by people that had been trading here for years, I don't want to say butchers because you will think I'm pushing it, but it was very evident at the fat stock sales.

The Chairman: That's a strange side light on the whole situation isn't it, that first of all they were going for the prize beasts and then suddenly they were able to say "we have the market".

Mr Marquess: That's right.

The Chairman: It wouldn't at all surprise me, it wouldn't at all.

Mr O'Brien : Could I add another bit to it?

The Chairman: Yes.

Mr O'Brien: I think the Agricultural Committee should support the auction mart in some shape or form. I don't know what way you would do it, but I think they should lend their weight and put their voice to it, it would be very useful.

The Chairman: We will consider that.

Mr O'Brien: Because we need everybody who can help this industry.

The Chairman: Right. Gardner?

Mr Kane: Thanks Chair. Firstly, I would commend the National Beef Association for their submission to the Agricultural Committee. A very frank insight into producer difficulties and, I believe, a very accurate account of the factors of trading organisations responsible. First Harry, in reference to livestock grading, farmers are under the opinion that stock are being downgraded as you have said, probably at abattoirs, and they are not too happy about the LMC operation in general. They also believe that there is, I must emphasise, that there is a cartel being operated within the LMC, the meat exporters, abattoirs, meat processors and retailers, and being the member that brought this issue up at the first instance I would call upon the Office of Fair Trading to investigate the issue immediately for the benefit of producers and the meat industry.

I have also experienced LMC staff making drastic errors in grading and I can assure you it doesn't go down too well. Harry, where do farmers stand in this respect and what initiative can they take?

Mr Gordon: If I could take that point? I think quite honestly we have got to the stage that farmers, it used to be if a farmer went into a cattle market and bought an animal he had a fair idea where it was going to grade, now he hasn't a clue, no idea at all. I think too farmers have got past the stage of trying to do anything about the grading because they see they are getting nowhere. If you do anything with LMC they tell you DARD are responsible and DARD are checking them. If you go to DARD they tell you it is LMC, they are only overseeing it. I think the way to fight it is get away from the pricing structure that we are under. As you all know before BSE, 82% or 83% of beef out of Northern Ireland was exported. Our factories tell us what a wonderful job they have done, that they are getting 80% into the English supermarkets. Why aren't we being paid the same price as the English? We are being paid in grades, the English farmer laughs at us. The cattle are graded in fat as you know, R3 for example is the average bullock. If we go to an R4 we are cut 6p. England, Scotland are given a penny more for it. We are all going into the same supermarkets, that is our gripe. We need to get a transparent pricing structure that a farmer knows, two or three prices. Over six prices were quoted by LMC last week in their bulletin. The Northern Ireland price varied 24p, the English price varied 9p and Scottish price 8p, that is what we are up against.

I don't honestly think we have a chance of changing the grading structure because it is coming from Brussels through MAFF through DARD from through LMC it is just kicked about. You can't get at them to change that, but I do think we can change the price structure and that has to be our way forward, to try and fight that price structure.

Mr Kane: You must agree, Henry, that the producer at the end of day is paying a dividend that no-one else is, he is paying the dividend to keep LMC there doing their work.

Mr Gordon: The farmer pays for everything at the end of they day. Whether you say the factory pays anything is irrelevant, it comes off the farmer's bullock.

Mr McKevitt: Could I make a comment here? The industry is looking for a Rolls Royce at the moment. They are only prepared to pay the price of a Rover. One of the reasons we went to the Office of Fair Trading about the meat plants is because there is more than them involved in this, we think the Government has a hand to play in this. Naturally the less we get at the farm gate the more the next people get, the meat processors (inaudible) corporation taxes should be paid to the Government. We prefer, rather than going to the Office of Fair Trading and these people, to marry the relationships that should exist within the industry to eliminate the exploitation that has taken place at the moment, because our products are worth less than cod in the North Sea that has become extinct because of exploitation. We try to get these people in to try to bring a bit of pressure to bear on the situation. The multiples will be able to say at the end of the day there is no real evidence because they can hide it. With the BSE we know the plants have the first tier of it, now they could be economic about the actual return, they could be of course totally inefficient in their conduct of their operations or the most likely one is they could be (inaudible) running a business in a tax friendly manner. We can't do anything about this, the Government must marry the relation in some way so we can exist.

Mr Kane: Chairman, I must take this issue on board no doubt.

Mr Marquess: Could I make a further comment?

The Chairman: I want to bring Mr Ford in here please.

Mr Ford: Thank you Chair. I was reading the piece in your paper about the price of export of live cattle to GB and specifically you say that in January because the GB price fell it became uneconomic to try it; do you think that there is a long term route there? Is it something that the Association should be seeking to organise? Should we be speaking to some other body to try and co-ordinate it if it seems to be the only way at the moment of getting past the meat plants in Northern Ireland to develop a better price for some cattle?

Mr Marquess: A funny thing did happen at that particular time. I'm not saying this method was caused, cattle did drop slightly in GB and cattle rose slightly here, so the differential was no use. Now whether that was a manipulated rise here to keep people from going across with them or not I can't say, but it did appear to be that way.

Mr Ford: Do you see the prospect of trying that again in the future?

Mr Marquess: Yes we would at the minute, if it starts beef will maybe rise 5p here. Then it makes it worthwhile.

Mr Ford: If that were to be the case then who should be organising it? Is there some scope for some co-op development or?

Mr Marquess: We were in the process of organising it, a few of our members had taken cattle across to test the water as such and that is what happened. They had a few loads across, it was actually the fatter cattle that were making the better prices across the water, funny enough. They differential between the U grade cattle here and across there wasn't just so high, it was the fatter grade of cattle that the differential was between, there was as much as 25 pence in some instances.

The Chairman: Could I bring Billy in?

Mr Armstrong: Just on the same point my friend is on here. You advocate auction markets so is this where you are coming from in auction marts, that more cattle should be coming from Northern Ireland and going from Northern Ireland to the English market as live animals to be auctioned at livestock markets in GB or what way are you seeing auction markets being the way forward?

Mr Marquess: Well the Troubles had a part to play in this too. Men are a bit afraid to come across from England. We have asked them on a few occasions to come across and buy cattle in the live marts here. They are a wee bit afraid, to be honest, to come across.

Mr Armstrong: You are really looking for an extra customer from the mainland to come over and buy a lorry load of cattle and take them away home again?

Mr Marquess: They are a wee bit afraid.

The Chairman: Why are they afraid?

Mr Marquess: They have a perception in England where a lot of people, they just wouldn't want to go into an auction mart and start to bid against other people.

Mr Gordon: If I may add there, you also have the problem we had when we tried to talk to some of the abattoirs in England about sending cattle over direct for slaughter in England and Scotland, was that it was very hard to find an abattoir that hadn't a tie to Northern Ireland abattoirs or the South. We were told unofficially that the word was you don't buy anything out of Northern Ireland.

Mr McKevitt: The other thing is we did have an ad in the Traders Journal in GB inviting them to come to Northern Ireland and I don't know that we had any benefit.

Mr Marquess: We had a couple of applications then the price rose here. But of course, the processors get the Traders Journal so they saw this was going to happen. A point, Dr Paisley, before I forget about it, Gardner asked a question about grades in abattoirs. I would kill in a private abattoir mostly, nobody has ever said that they got the wrong grade, yet the same graders are grading cattle in that private abattoir as they would be, in a small public abattoir I'm talking about, the like of Robinsons of Lurgan. The same graders are grading those cattle as grading in ABP, Ballymena the rest of them. I hear quite a few farmers and a lot of people have said some of them have got their grades changed over the years, they have said to me: My grades weren't right. I brought in Kenny Hill, he is the top grader, I brought in Kenny, he looked at them the grades were wrong. I think it is very very easy if a man is on site and somebody is looking over his shoulder, I'm not saying he is getting paid, I'm not putting any devious points to it, I'm saying that if a man, if the proprietor or the manager of that boning hall is looking over that fellow's shoulder he can be slightly manipulated and steered into maybe producing a lower grade where it is going to benefit the processor an extra 6p, that's an extra £20. A dangerous thing to say, I have contacted the LMC on several different occasions and spoke to them about it. They say there is no way it can happen, it is visual assessment, one man's opinion against another's.

The Chairman: LMC will not take any criticism against themselves. They get very, very enraged at anybody, whether he be politician or farmer or anybody else, or whoever condemns them. They think they sit in an ivory palace, they are not to be condemned. As far as this Committee is concerned I can assure you if there is something going wrong in this business we will get to the heart of it. I mean we have the power to summons people before us and papers, we intend to use this power and we have to do it because these matters are of a very serious importance today because of the state of our farming community. The farmer can't afford to have a lower grade, he must get the grade he is entitled to. We have got to see to that.

Mr Kane: Chairman, my remarks have been supported by these gentlemen here today. I think it goes right across the board.

The Chairman: I want to get PJ in.

Mr Bradley: Thank you Chairman. I wanted to get a point across to these gentlemen on these toing and froing issues. You allege in bringing in GB beef, cutting and packing it here, returned for selling in GB as negative influence; do these activities not secure jobs in Northern Ireland? How do you see the cessation of this practice contributing to the industry?

rdon: It does give jobs, yes, there is no doubt about it, but we see that it has got to the stage with one particular processor that it is virtually the major part of their business. So they are in the position now that they can supplement that business from the Northern Ireland market when it suits them as opposed to being in the Northern Ireland market to try and make a price for the Northern Ireland market unsupplemented from the mainland. Therefore, they are of no real benefit to the Northern Ireland industry, they are actually using it as a top up pool rather than helping our industry. That's the major problem with it coming in.

The Chairman: Thank you. Well gentlemen, thank you very much, it has been a very interesting discussion and a grave discussion indeed because these things are matters that need to be got out into the open. They also need to be investigated. As far as this Committee is concerned, as long as I'm Chairman of it, we are here to see that all parts of the Agriculture Committee will get fair play, but we wouldn't tolerate anything that is detrimental to the industry. These things that have been mentioned are detrimental to the industry especially at a time when this industry is fighting for its life. Thank you very much for coming, we look forward to seeing you again. If you want to pay us a visit three months from today I'm sure we will be glad to welcome you again. Thank you. I see my friend Mr Overend is waiting patiently so we will have to get him into the chair.

30 June 2000 (part ii)/ Menu / 30 June 2000 (part iv)