Committee for
Agriculture and Rural Development
Wednesday 4 October 2000
MINUTES OF EVIDENCE
Pig and Beef Industry
Members present:
Mr Savage (Deputy Chairperson)
Mr Armstrong
Mr Bradley
Mr Dallat
Mr Ford
Mr Kane
Mr McHugh
Mr Paisley Jnr
Witnesses:
Mr H Hamill ) Ulster Curers' Association
Mr A Forbes )
The Deputy Chairperson:
I declare this morning's meeting open and formally welcome you. I am sorry that we are running slightly behind time, but I am sure you understand that such things can happen when one gets into a discussion. I did not want to be sharp with anyone; I wanted to give everyone an equal opportunity to speak. That is how we stand at the moment. Do some of you wish to make an opening statement?
Mr Hamill:
I should like to thank you for asking us along here today to state the case for the much-maligned pig processors.
The Deputy Chairperson:
You may have 10 minutes, if you wish.
Mr Hamill:
My company and the smaller processors have, for a number of years, consistently paid the highest prices in Ireland. At the moment, the pig price we are paying is the third-highest in Europe when converted back to punts. We were foremost in pushing for and paying a £1 quality-assurance bonus, which was introduced to Northern Ireland in 1992. We stopped that late last year, because we could not afford it. However, we still pay farmers' costs for quality-assurance inspections.
We buy pigs direct from the farms. I speak for ourselves and smaller processors. We do not use dealers or auctions; all pigs being bought direct. We arrange open days for farmers to visit the factory and meet the veterinary people, allowing them to see condemnations and so on. This helps to reduce the cost of condemnations to ourselves and the farmers. We have supported schemes to help pig farmers. We pay a grant for farmers buying pedigree boars. We pay for the ultrasonic testing of sows. We have also helped some farmers who were in serious financial trouble. We work closely with Greenmount College regarding student visits.
We are Northern Ireland companies committed to local farmers. I come from a farming background. My sisters are married to farmers. We understand and think like farmers. Records show that the selling price of pork and bacon is reflected in the pig price. At the moment, the industry is Europe-wide and market-driven. Pig processors would like to pay more for pigs, but they do not have the funds to do so. All processors have spent millions over the last few years upgrading their plants to meet new hygiene regulations demanded by supermarkets and veterinary people.
We all have had to employ additional staff, keep daily records and record temperatures and hygiene standards. These things were not required a few years ago. In addition to that we have had to pay for a full-time veterinary officer and four meat inspectors.
The Deputy Chairperson:
A recent attempt to create a strong producer group seems to have developed very slowly. Yet the pig industry is in deep crisis, and the need for such a group seems to have been widely accepted. Why has progress been so slow? Do Northern Ireland pig producers not believe in co-operation, or is the concept beneath them?
Mr Forbes:
The curers would welcome the opportunity to talk to local pig groups, however, there must be accommodation and ground rules to safeguard the interests of curers and pig groups. In a very strong market a group moving from curer to curer could do very well, but in a weak market, that group may have difficulty moving their pigs. Curers need to be assured of a steady supply of pigs, so that they do not let their customers down. If any of your wives go out to buy the bacon for breakfast in the morning, they want to be assured that the bacon is in the shop. If curers do not get a steady flow of pigs because a group is selling to somebody who can afford better price, the smaller curers have no chance. For years there was only one group in Northern Ireland which was the Pig Marketing Board, and for some people, it worked very well. We want to accommodate everybody, but we need pigs. I come from a farming background which is a homespun company.
We appreciate that you have asked the small people to come here today and that you were good enough to bring your Colleagues along to a small company in Mid Ulster when this Committee was first established. We also appreciate the hard work that you are putting in to this. We are happy to talk to groups as long as it is fair. The problem is, however, that there are some very strong farmers who want to pick us off against each other. That is not fair, and we will not wear it. We have had a very rough playing field as a result of the sterling crisis, the BSE crisis, the overproduction of pigs and all that we have come through. In 1993, the Departments gave us grants, but we still had to spend £1·5 million to bring our factory up to EU standards. My boss and I had to pay out everything we had ever earned just in order to survive. When I started in this industry, there were 60 or 70 curers, and the number of pigs has been depleted from 45,000 to 25,000 a week. If the English-based company, Maltons, goes tomorrow, that number will be reduced further. We are up against the wall.
Mr Hamill:
Farmers approached me and told me not to buy pigs from the group and not to join it. I met the group, and then news got out that I had been talking to them. Some farmers phoned my pig procurement manager and told me not to have anything to do with the group.
I can give you the names of those farmers, if you want them. We were told to have nothing to do with that group.
The Deputy Chairperson:
Members, I ask you to keep your questions brief and to the point. I also ask the Gentlemen at the bottom of the table to keep their answers brief, as it gives everyone a chance to speak.
Mr Kane:
You are welcome, Gentlemen. It is good to see you here, and we will try to work with you as much as we can.
Your submission has interesting price comparisons over the 19-year period, and these appear to suggest that the retailer has done very well in respect of the price of pork. Assuming your average selling price is that paid by the retailer, the pig price has, however, reduced by twice as much in percentage terms as, for example, the price of loins. Can you account for this, and has the price reduction been passed on to the consumer?
Mr Hamill:
The prices I quoted to you are wholesale prices. These can be verified if you want to visit the plant. The prices to wholesalers that I quoted for September are current today - some current prices are, in fact, lower. We could not sell legs last week; we were offered 57p, and another three or four pence on top of that for shipping to England. We had to put the legs into cold storage, for there was no demand.
The fact that we are not paying a similar price to that in England is often cast up to us. I could pay more for pigs if I cut down on my throughput and bought product from the Republic and Denmark as Maltons is doing. Maltons is purchasing 50% of their product from Denmark and Holland. They can afford to pay more for their pigs, as that product is cheaper. It would pay me not to handle Northern Ireland pigs at all and import the product and sell it, but I have a commitment to the Northern Ireland pig producers and I will not take that course of action.
That is the predicament we are in, and through no fault of pig producers or processors, the main costs have resulted from the BSE problem. My financial year finished in September, and I am paying £300,000 to get rid of waste material, but three years ago, we were receiving money for bones. Who pays for that? The pig farmer - he has to pay for everything. Water has gone up; the price of getting rid of sewage is rising; the price of electricity has increased; wages, everything is going up. At the end of the day, the pig farmer has to bear the cost. Processors are losing and have lost money over the last two years, and their accounts will show that. We are on a sticky wicket.
Mr Kane:
I welcome Mr Hamill's response and his commitment and honesty.
Mr Bradley:
To be honest, I was not aware of your role, and I must express admiration in respect of your effort to support the local industry.
Your submission paints a very bleak picture of cheaper imports from the Republic of Ireland, Denmark and Holland forcing the price of Northern Ireland pig meat down. Is it not possible to market our pig meat on the strength of the additional welfare and hygiene standards here?
Mr Hamill:
We do that already - our pigs are 100% quality-assured. That is why we have paid a bonus since 1992 to encourage the farmer. We got business from Sainsbury's because we could prove to them that our pigs were all quality-assured. We had another company with us a few weeks ago, who had to go to a farm to see for themselves that the pigs were quality-assured. If that is not the case nowadays, you cannot sell, especially across the water.
We are asked for quality-assured pork, not Ulster pork, Irish pork or Stevenson's pork, what the customer across the water is asking for is British quality-assured pork, and that is the standard our farmers are aiming for and that some of them have reached.
Mr Bradley:
Do Sainsbury's dictate to you in relation to the price?
Mr Forbes:
Unfortunately, it was the multiples that pushed for this quality assurance, and we were quite prepared to go along with it, but they have not come up with the price. They buy foreign stuff which defeats the whole thing.
The Deputy Chairperson:
That defeats the object of the whole exercise.
Mr Armstrong:
You have suggested a number of steps to ensure the survival of the industry. However, you must accept that the currency situation is not going to change, and there is not likely to be compensation for the so-called BSE tax. How achievable are your other suggestions, and who must do what to achieve them? We used to have a steady supply of pigs, and there would be a steady supply of pigs again if it were profitable.
Mr Forbes:
I have no doubt about what Mr Armstrong is saying. I was listening to some of the remarks made to the previous witnesses - that you were filling the vacuum that has been going for so long. I hear and read about what the French, Danish, and German Governments, amongst others, have done for their own people, and, unfortunately, we are not doing enough for our own home produce. I have said it time and time again, and you have seen the posters which say "Home Produced". Think of the number of people employed in Government, in the Health Service, and the schools. If you could persuade them all to buy British, to buy home-produced products, think what you could do for your own people. We have to look to ourselves for help; nobody else is going to help us. We have brought in foreign companies, and we have fed them with IDB money. What do they do? In a few years, they are up and away, and you are left with the likes of us wee fellers - homespun companies. Please, Gentlemen, support us, and we will repay you. That is all we are asking. Support home-produced products.
Mr Hamill:
For 10 or 12 years, we had a contract to supply hospitals with pork and bacon. Three years ago, we lost it to a smaller company in the north-west which was importing produce from the Republic to Northern Ireland. Bríd Rodgers opened Pork Produced Ltd three weeks ago. We supplied them with pork, until they were taken over by Dairygold Food Products Ltd. All its products are imported, and it was all blown up to be of benefit to Northern Ireland farmers. We have not sold them a sausage since then. Practically all of their produce is imported from the South of Ireland.
Mr Forbes:
Before the multiples came in I had a portfolio of about 300 customers. Now they are all closing as the multiples take over their business. We are trying to get some of that business back, but it is a hard fight.
The Deputy Chairperson:
It is a hard slog?
Mr Forbes:
It is.
Mr McHugh:
You listened to what we were asking the other groups. I agree with what you say about the awful costs associated with BSE, and how the British Government did not take their responsibilities seriously. What do you think of what we are doing as a Committee, in terms of trying to reach the bottom of the debt situation? What is your own relationship, as a curer, with the processors as opposed to the retailers? Where are the profit levels? The retailers tell us that they are not making much profit, so we need to be able to find out who is telling us the truth.
You heard allegations and counter-allegations earlier. What is your perspective on how we are dealing with the situation as a Committee, and what would you like us to do to help your situation, or that of small groups or small industry?
Mr Hamill:
We are telling you the truth. My business has been built through reputation, not high-flying advertising. It has been growing steadily over the years through my reputation. My word is my bond; it has always been. What we are telling you is the truth. Pig processors are not currently making money, and that is the case even for the Maltons of this world, and Glanbia. There will be a massive shakeout across the water in the next few months. I do not know what the future holds; I do not think anybody does. I think the Committee is doing a good job. Something should be done to help those industries that are in dire straits, but I cannot see the Government doing anything.
Mr Forbes:
I should once again like to add that I am full of admiration for the Committee, both for the way you came into my factory and before that when you were being established. You are all most welcome to come and visit at any time. We will be only too glad to see you, and we will show you everything and work with you in every way you wish.
Mr Paisley Jnr:
How do you respond to the trading and commercial regulations? We can do absolutely nothing for you, since, at the end of the day, this has to do with the very weak Euro and strong pound. Little can be done to help the industry until that rectifies itself, if it ever can. If you had the ability to take a blank sheet of paper to the Minister at the Department of Agriculture and Rural Development, what changes, within the bounds of EU regulations, would you ask her to make for the industry?
Mr Hamill:
A level playing field for sterling would assist the industry most. There is no doubt about that. On a level playing field, we can compete with the continentals and the Irish Republic. Things started to go bad for processors because of the difference in sterling when Britain did not join the Euro. Before that, we made reasonable money, paying a fairly good price for pigs, but it is mainly since the big difference between sterling and -
Mr Paisley Jnr:
If we joined the Euro now, would that change?
Mr Hamill:
It would make Republic of Ireland and continental produce more expensive.
Mr Paisley Jnr:
There would be a disadvantage if there were a flip in the market and the Euro suddenly became too strong, and the pound were weak.
Mr Hamill:
A strong Euro would undoubtedly help UK and Northern Ireland producers. Agriculture would have done much better had we not gone into the European Community. Pig farmers, in particular, and intensive farmers, in general, could then have bought cheaper American and Canadian grain.
Mr Paisley Jnr:
What are the changes you would like the Department of Agriculture and Rural Development to put in place to assist your industry?
Mr Hamill:
We met the Department of Agriculture and Rural Development and came up against a brick wall. Their hands are tied by Brussels and the Ministry of Agriculture, Fisheries and Food.
Mr Forbes:
Perhaps I can answer part of Mr Paisley Jnr's question. If we were allowed to bring grain into the ports directly, the way we used to do - and I believe the poultry people have also said this to you - instead of having to go to Rotterdam and pay the levy over there, it would certainly help us. We are on the periphery of Europe. We are an island out on our own, and if we were able to bring grain directly into Derry - or Londonderry, if you prefer - and Belfast, that would save us money. Everything has to be brought in and out of the country, and transportation and fuel costs are a problem.
Mr Paisley Jnr:
But what could the Department of Agriculture and Rural Development do specifically?
Mr Forbes:
We could persuade Brussels that we should be allowed to bring our grain in direct from our English-speaking American friends.
Mr Dallat:
I should declare immediately that I am not a farmer at all.
The Deputy Chairperson:
But he eats a power of bacon.
Mr Dallat:
Despite everything that was said in the Assembly on Monday, I do go into supermarkets occasionally. My eyesight is not bad, but I find it virtually impossible to identify where a product is made, and I get extremely angry at seeing labels which say "sourced in Northern Ireland", a phrase which we now know means nothing.
Can anything more be done? I cannot resist asking you if the existence of a strong, independent retail sector is important for you in your industry? I want to hear that. Also, on the issue of importing - and this is not political - I am aware that lorryloads of bacon come in from Denmark are labelled in Northern Ireland and sent off to the South. I suspect, therefore, that farmers are being penalised on both sides of the border. There is a need for a collective approach to a very serious problem, and you do not have to tell us any more about that. There are pig farmers who are selling sites to try to survive.
These are things that immediately come to my mind, as a consumer. I have seen the difficulty in identifying Northern Ireland products, because the writing on the labels is so small. There are deceptive signs on them about sourcing. When I have the choice, I shop in independent shops. How important is that? We take evidence here from all sorts of groups, but there seems to be no collective approach, no Northern Ireland loyalty to anything. We are all on our own, hanging by our own tails. When I go to France it is a culture shock for me to see how people there can stick together. They even organise their diet around what farmers produce locally, for whatever reason. We do not do that. We almost go out of our way to do something different.
Mr Forbes:
I have been a member of the Pig and Bacon Forum since the demise of the Pig Marketing Board (PMB), and I believe that the present chairman has done a great job for the Pig Forum and the promotion of pork and bacon. That organisation is made up of millers, processors, and farmers. In a very small way it is trying to promote home produce, and any money it can get will be welcome. It involves homespun companies trying to sell directly to local people.
Mr Dallat:
With regard to home industry, I once heard a very clear message from grain producers, and I have never forgotten it. If half of the people in the UK could be encouraged to take a cereal breakfast twice a week, it would eliminate all the grain mountains in the UK. Just two cereal breakfasts in the week.
The Deputy Chairperson:
That would be good for them, as well.
Gentlemen, one processor of great size appears to dominate the pigmeat sector in Northern Ireland. Others which you represent are also important players. The biggest processer appears to have the market power to assess the best markets and the ability to build brands. One strategy for pig producers would be to try, by every means possible, to become such a high-quality supplier to this major customer as to earn a preferential place in the range of supply options. Is there a better option for the Northern Ireland pig producers?
Mr Hamill:
It is a very difficult question. I have a long list of pig suppliers to the Malton Bacon Factory Ltd, who want to leave and come to me. I cannot take them, because I am frightened of upsetting Maltons. Maltons are powerful enough to put my light out overnight, if they so decided. There is no rush of people going to Maltons. They are going, because they have no option. I think we are going to see changes there. It is widely known that it is for sale. There are rumours of different groups' being involved in it. I do not know what will happen in the Northern Ireland plant. I just trust that it does not close. If it closes, we, as an industry, are in dire straits.
The Deputy Chairperson:
If the trading losses and the increasing costs you outline for processors are to be believed - and I do not disbelieve what you have told me - is there any realistic hope for the pig industry here?
Mr Hamill:
That is what concerns us. If I have no pigs, I have no business. It is the same with the rest of us. You could depend on imported product for a while, but once the currencies levelled up, you would be squeezed out altogether. As far as we are concerned, we need pigs. I know pig farmers have found it very difficult in recent years, but there are still pig farmers who pay their bills every month. The millers will tell you that. There are still pig farmers who say they are breaking even, maybe making a shilling or two. Others are in deep debt, and I have helped them. I may never get the money back again. I have guaranteed them a price that allows them to pay their bills in the form of a loan. If the pig price were to go up above a certain figure, I would hope to get my money back again. If not, I would not get my money back. If they were to go bust, or if the bank were to foreclose, I would be in difficulty. We are doing our level best to assist producers to stay in business.
Mr Forbes:
Yesterday at the Forum we were asking the same question of farmers around the table. There is no doubt that there are very efficient pig farmers, and it is all about economies of scale. If they can up their numbers of sows and if they can get their compounds and things sorted out - buy them at the right price, mix their own, or whatever - there is no doubt that the efficiency of the Ulster Northern Ireland pig farmer will keep us in business, to some extent. There is an economic circle which is going round, and it will come round again in time.
Mr Hamill:
Feeding costs have come down during the last couple of years and have been a big help to farmers.
The Deputy Chairperson:
The pig meat industry, in recent times, had a unified marketing board, a farmer-owned processing plant, and, as you referred to earlier today, a strong farmer-owned brand. All of these have either gone or have passed out of farmers control. What are the implications of this, and what lessons can this Committee draw from what has happened?
Mr Hamill:
The largest pig processor in Northern Ireland was the Pig Marketing Board, which had, at one time, five factories slaughtering 40,000 pigs a week. They could not make it pay, and they closed one factory after another. In the end, they had to sell the offices in Newforge Lane to keep Unipork going. PMB sold for £3 with £3 million or £4 million of debt to Willie Wilson. He is the only man who has made money out of this, when he sold to Malton.
The Deputy Chairperson:
He knew, and there was no doubt about it. I am used to working with pigs myself, and I remember the time when the Pig Marketing Board was going and you had to put your card in to give so many pigs away. Can you, Gentlemen, in your wisdom, see that situation coming back again? If it was getting Government support, do you think we could make it a viable situation?
Mr Hamill:
Can the farmers run it to make a profit? I do not think they can; I think it needs to be in private industry. They were not able to run it in the past. If farmers come up with enough money, I will sell them my business.
The Deputy Chairperson:
Supposing some individual person took this on board as another outlet to Maltons, could that person be guaranteed to supply pigs to make a viable situation?
Mr Hamill:
I do not know, Mr Chairman. As you know, there were three large pig farmers brought together, and are telling me they are struggling and have not made any money since they started up two or three years ago.
The Deputy Chairperson:
Are there any other points you would like our Committee to take up with the Department on your behalf? This Committee genuinely wants to support you people. We do genuinely want to support you. I am telling you this, because industries like yourselves and small groups like yourselves are the backbone of this country, whether we like it or not. We will do all in our power to support you in any way that is possible.
If you have any ideas that you want to put forward to us that we can take to the Department, please let us have them.
Mr Hamill:
I have a friend who retired a year ago, and he went to the north of France on holiday this year. He got talking to someone in the pig processing business, and they were comparing notes. Here, we have meat inspectors - I have one all the time, and we have to pay these people - but the man in France told my friend that there is one meat inspector in Normandy. He lives in the south of France, so it does not cost them anything. We pay money every month to keep these people, whereas our French counterparts do not pay anything.
The Deputy Chairperson:
I am a member of the Committee of Regions in Brussels. I see the groups that started up in France get a lot of support from their Government. I am convinced that our Government are trying to run the agriculture industry down in Northern Ireland. If I were to sell my farm here and move over to France, the support that I would get there is unbelievable. A number of years ago the French Government neglected the farmers, and the farmers started to leave the land. If our Government does not start to support the farmers here, they will have to turn around and do the same. The farmers cannot work for nothing. I am glad that you have come in today to give us another side to this story.
Mr Forbes:
I have left some history of the industry with the Committee members so that they may have a browse. If any of you can put forward suggestions for us, we would be glad to hear from you. Thank you for having us.
The Deputy Chairperson:
On behalf of the Committee, I thank you for coming here today.
4 October 2000 (part i) / Menu / 4 October 2000 (part iii)