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PROCEEDINGS OF THE COMMITTEE (Continued)
MINUTES OF EVIDENCE Friday 9 June 2000 Members Present: Rev Dr Ian Paisley (Chairman) Witnesses: Mr C Duffy ) Northern Ireland Meat Exporters’ Association 415. The Chairman: Could I just tell you gentlemen, the procedural matters? Mr Duffy, Mr Mathers, procedure is that you will give us an introduction for about ten minutes or so. I will ask a couple of questions, then Mr David Ford, Mr Gardiner Kane and Mr PJ Bradley will ask you questions and there will be a supplementary question to each of them. So if you would like to make your presentation now you are welcome. 416. Mr Mathers: Chairman, our presentation will not be ten minutes or so but we have opening comments we want to make. 417. The Chairman: It is just a time factor. 418. Mr Mathers: So first of all, Chairman, I thank you for the invitation to the Meat Exporters Association to meet your Committee this morning. Probably because we are more focused on red meat and the processing sector in particular perhaps some of our views may not precisely be in line with how the farming organisations might see the way forward, but we are particularly focused on the way forward because we do not see ourselves as having any particular insight into the debt of the entire agricultural community. 419. The Chairman: Yes. 420. Mr Mathers: And the farmers probably see things from a slightly different perspective, then we have to look at them ourselves. Nevertheless we appreciate the opportunity to input into the work that your Committee is trying to do to establish a strategy in the best interests in the Northern Ireland agri-food industry. Now, as an important part of the agri-food industry here the Meat Exporters Association would want to assist you in achieving that. We would ask that your Committee take cognisance of the Red Meat Strategy Report that was produced jointly by the farmers, the processors and Government agencies as already been presented to Ministers sometime ago because the contents of that Strategy Report would still be very relevant to where we see ourselves going to the future. We did express our feelings for the future to you in our written response at your initial request. If we are going to be serious about maintaining a viable agricultural industry as part of the Northern Ireland infra-structure then we believe some serious decisions will have to be made which may indeed prove painful in the process to everyone. In our view it is a prerequisite that further processing and added value to the raw materials produced in Northern Ireland farms should be done in Northern Ireland thus further assisting the employment in and preservation of life in the rural areas. I believe what we are doing at the minute needs to be improved on if there is to be a vibrant rural economy in the future. 421. The Northern Ireland Meat Exporters Association has a very clear vision ourselves of where we want to get to. Our aim is to be a world-class industry able to meet the demands of specific niche markets around the world. Our aim is to ensure the sustenance of rural prospects by a direct supply chain down a market focused route and to develop the Northern Ireland industry taking into account the constraints of Agenda 2000, the whole globalisation problem and the enlargement of the EU, all of which, we believe, will have a major, major effect on Northern Ireland Agriculture. To ensure a place on the top shelves of Europe’s supermarkets then we have to be perceived as having something different. One of the main criteria will be Total Quality Assurance throughout the supply chain. Deciding on where we see ourselves going will then determine the actions that have to be taken to get us there. It will undoubtedly mean Total Farm Quality Assurance, IT development on farms and the introduction of e-commerce at farm level. We see this as a long term strategy which everyone has to buy into now to ensure a viable future for everyone. In your invitation today you indicated five areas in which you would like us to comment and we are happy to do that but we feel perhaps more qualified in some of those areas rather than all of them. So perhaps my opening remarks have already covered the first point that you asked to us to comment on in your letter. Now we are happy to answer some questions. 422. The Chairman: Right. Well thank you very much for giving us a good brief. It certainly helps us timewise so that we can come to the questions. I would like to put to you two questions that are really general because as you know we have to prepare a report, Mr Mathers, for the Assembly and we need to have evidence short and crisp that we can base certain conclusions on. Now, do you consider that the primary producer, the farmer himself, is getting a fair price for the products when you think that the consumer, that is the housewife, is saying to us, we do not see any vast drop in meat prices, in fact, we don’t see any, in some shops we see a rise. Now how can the farmer get such a deplorable price compared with even years ago to what the housewife is being charged over the counter? Now what we are asking is a simple question: Are they getting a fair price for the produce or is the competition between the supermarkets of such a manner that farmers are really losing out in the big battle of the international supermarkets? 423. Mr Duffy: I think you have to look at the EU policies and strategies there, Agenda 2000, and what’s happening is that they envisage world prices coming back and subsidies being increased. The market itself that we are living in at the moment is an unnatural market in the sense that it is the best market available, we only have one market. But when it is compared against the ROI or other markets out there who are quite willing to look rather enviably on the prices that have been paid in the GB market. The retailers would argue that there has been a 25% reduction overall to consumers in prices over the last number of years and we hope we will be able to get you some statistics on that to prove that. The other issue is very difficult here, that 35% to 40% of the value of the animal now comes in the form of a subsidy. There is definitely room for improvement in prices as they are presently structured, but what has to be addressed is the quality issue in our farming community at the moment where approximately 35% to 45% of the animals which we are producing are not basically wanted by retailers and this is largely due to farmers really ignoring the market demands and doing their own thing to a large extent. 424. The Chairman: Well farmers would not, with all due respect, Mr Duffy, farmers would not accept that. I mean we are faced in this Committee with a fact that there is crippling debt on farmers, a debt that they never envisaged would ever come to them the way it came and also came to them suddenly. Now, they are saying to us, look at the end of the chain when the produce is put on the shelf, the housewife seems to gain nothing, we are not getting the same price as we got years ago on the market comparably in the market. Let me just illustrate this to you, we met some time ago before this Committee was set up unofficially with various groups — the meat men, the producers who produce the stuff when it is sold to them from raw meat from the carcass — I asked them: Are any of you fellows going bankrupt? Are any of you considering suicide? Not one of them. Then we brought in the bankers and we asked them were they thinking of selling their car and driving a cheaper model and none of them, they weren’t contemplating suicide. But farmers are committing suicide, farmers are under tremendous mental stress because they are in a position they were never in before. The housewife then turns on us and says: You are always talking about the farmers, but what about us, we get no benefit from this at all? Now we are trying to find who is making these gains. Are they legitimate gains or are they an exploitation of the circumstances that have brought about this situation? So what I am asking is really, do you feel that the farmer is getting a fair price for what he produces? 425. Mr Duffy: On average the farmer is getting a fair price, he could presently, if he had the quality required, be getting more, but what is happening is that there is an averaging going on out there. To ask; is there exploitation? If you look at the costs that have come in and sophistication of the market we are serving and legislative burdens that have been put on the industry, no. It amazes us when we look at what farmers are paying for store cattle at the moment it just does not make sense. So why would they continue to go out despite the fact we accept they are custodians of the land and there is hardship out there, there are people going out there and paying prices for store cattle at the moment which do not make sense. 426. The Chairman: Well let me put one other question and my colleagues must come in, would you agree that farmers need to come together in co-operative producer groups if the industry is to lift itself out of this crisis? 427. Mr Duffy: Yes, it is the only way. And I think that hopefully this group, agri-vision group, will highlight the opportunities that are there to put us ahead again in the market, especially when we look at the export situation when it re-develops for us again. The only way forward is for us to come together on strategies because no farmers, no meat plants. 428. The Chairman: Right, thank you. 429. Mr Mathers: Just one other point Chairman as well, it is very often forgotten that since 1996, since the BSE crisis came in, that the industry has had to deal with over 70 pieces of new legislation, each one have added costs into the business. We are currently sitting and you are going to Brussels next week on the 13th to deal with the beef levy, one which is estimated to add another 8% — 430. The Chairman: Strasbourg actually. 431. Mr Mathers: — to the cost of production. Now if you get done what we have asked you to do, it will reduce that cost up to 3% or 4%. That is another cost there that we have no control over neither have you, nobody, anybody else in this room. 432. The Chairman: It is unclear what will happen in that Parliament, major lobbies, if the Germans and the French gang up on us we haven’t a chance, it just falls by the wayside, but I take the point. Thanks for those questions, crisp and to the point. Mr David Ford, Mr Gardiner Kane and Mr PJ Bradley are my colleagues who are going to deal with you now. Mr Ford? 433. Mr Ford: Thank you Chairman. I want to take up really the last point that you were making, Mr Mathers. I was reading your written submission earlier, you referred to the 70 pieces of legislation since 1996 adding to costs and specifically leaving Northern Ireland as one of the most uncompetitive regions of Europe, are you saying that the legislative burden is significantly higher in Northern Ireland or perhaps in the UK than across Europe generally? 434. If so, why? And can I add to that do you think the beef industry is over-regulated or are these regulations necessary for consumer safety and consumer confidence? 435. Mr Mathers: In the case of Northern Ireland the proposed regulations bear no relevance at all to the risk that BSE here poses. Therefore in Northern Ireland the situation is totally over-regulated. In fact, there were 70 pieces of legislation when I wrote that letter, more have come into place since that, so the situation has got even worse. We would certainly subscribe to the Red Tape review that was carried out across the UK sometime ago when there were a number of recommendations made there about reducing that red tape. We would subscribe and agree with most of those recommendations that were made, we would certainly say that from a relevant risk basis in Northern Ireland yes we are over-regulated. You must remember that those regulations are relevant to the UK only which automatically puts the industry not only in Northern Ireland, us more so perhaps because of our low incidence status, but the UK generally at a much greater disadvantage than the other member states in Europe. 436. Mr Ford: Could you give us any kind of estimate for the total percentage costs added on for those 70 pieces of legislation? You referred to 8% for one measure, I presume they are not all at 8%? 437. Mr Mathers: I could not give you precise ... 438. Mr Ford: A precise guesstimate? 439. Mr Mathers: A precise guesstimate at all, but certain parts of legislation meant that at one time parts of the animal which brought a net income now are a net cost to the entire industry and that has a double effect. If you are getting 10p for something today and it costs you 10p to dispose of it tomorrow the net effect is 20p. 440. Mr Ford: Another point you made in the same part of your submission is less than 50% of cattle in Northern Ireland had export status effectively because of paperwork problems. Is that the fault of the Government, or farmers in your opinion and what can or perhaps what should be done by the Government about it? 441. Mr Duffy: It is partly due on two fronts, one is to the producer and the other is to the actual red tape that is involved. We are still very constrained by the information that we can get from our Department here and disappointed at the progress we have made on the APHIS system to date which under the Red Meat Strategy was meant to be finished now and to be the most sophisticated of its kind in Europe. 442. I suppose the other problem is really to the changing goal posts, again legislation to do with cattle movements and birth registrations which farmers not intentionally, but really when they have no interest, or do not see a bright future, do not bother burdening themselves with all this extra paper work and at this stage do not really see the relevance of it, but it will obviously have major relevance when we go back to an exporting situation. You could very easily end up in a two tier market with animals fit to travel and animals that are not. 443. Mr Mathers: Could I add just one little bit of information perhaps. The fact that while I said in that report that there were less than 50 % exportable, our figures currently, we are monitoring ourselves through the meat plants day-by-day, show a range of 37 to 43%, so it is even worse than that. 444. Mr Ford: Sorry, 37 to 43 exportable. 445. Mr Mathers: Exportable. So if we had low incidence export status in the morning, we have a problem. 446. The Chairman: Thank you. Mr. Kane? 447. Mr Kane: Thank you, Chairman. Mr. Mathers, what can be done to tackle the problem of over 50% of our annual lamb crop being smuggled into the Republic of Ireland. What effect is this having on the Northern Ireland sheep sector? 448. Mr Mathers: I do not know what you can do to stop that. That is probably a problem for authorities other than the meat industry, but it is a serious problem. It has just meant that over the last 10 years or so the lamb industry in Northern Ireland has not been able to develop to the extent of the potential that is there. The current currency differential between the punt and sterling has probably dampened that effect slightly, and over the last couple of years we have seen an increase in the number of lambs being processed in Northern Ireland. But our estimate is that there is somewhere in the region of about 1.2 million lambs available in Northern Ireland each year for processing. Last year I think we processed somewhere in the region of 490,000 of those, therefore that gives you the extent at which lambs are being moved elsewhere for processing that could be creating jobs and employment and assistance to the whole rural economy in Northern Ireland. 449. Mr Kane: Secondly, Chairman, as meat exporters you are well aware of the Farm Quality Assurance game. What benefit has the Farm Quality Assurance game brought to the Northern Ireland meat industry, as we understand that there is meat being imported into Northern Ireland that is not farm quality assured and then in turn the same meat being exported out again, going out as Northern Ireland Farm Quality Assured. 450. Mr Duffy: Well, Farm Quality Assurance is a prerequisite to supply to any premium market. The absence of it leaves you in a commodity market. It is imperative that the scheme which is only in 50 % of the farms at the moment in Northern Ireland is put into all of the farms. Unfortunately, yet again because of the view in farming at the moment and the pressures that are there, a lot of farmers do not see it worth the while, and what is actually happening is those within the scheme are having to accept a lower price because of the cost of those who are not in the scheme pulling the sector down. With regard to meat coming into Northern Ireland, are you making reference to an XAP scheme. 451. Mr Kane: There is food being imported into Northern Ireland that is not Farm Quality Assured, and I have information about it, it is going back out again as Northern Ireland Farm Quality Assured with a stamp on it. 452. Mr Duffy: Well, can I say that perhaps you have to ask the people who are actually doing that. All of I am aware of is meat coming in officially into Northern Ireland under a scheme is the XAP scheme, which is the basis for holding a customer, a very important customer with a particular company. As far as I am aware as well, they actually have their own scheme in place and their customers make allowances for that. So I do not really understand any shortcomings in it. 453. Mr Kane: Chairman, I just note the Chief Executive of the LMC shaking his head there, but that is not here nor there. I am quite well aware personally that the LMC is not carrying out their remit in relation to this issue. Thank you, Chairman. 454. The Chairman: It seems to me a serious thing that our Committee will have to delve into a bit better. I am a bit worried about customers having a special place to get meat in a certain way and then we do not know what is happening to it after it is in. 455. Mr Duffy: I would say the most tightly controlled meat coming into Northern Ireland is meat coming in under an XAP scheme and then leaving. The regulations that control the red tape associated to it is phenomenal. To answer how the meat is being stamped or labelled, that is purely between the company and the customer and I cannot comment on that. 456. Mr Kane: Thank you, Mr. Duffy, for your comments. Thank you, Chairman. 457. Mr Bradley: My question relates back to your opening question, Mr. Chairman, to do with the openness within the industry. I say to the gentlemen no doubt by now you are familiar with the exercise launched last week in the Republic of Ireland, where farmers and meat plant managers have come together to announce on a weekly basis the price of meat as being sold from the factory. Would you see that being introduced here, and if not being introduced here; why not introduce it here? The openness would certainly eradicate a lot of fears or a lot of concerns that are there amongst the farming community about excessive profits being made by the meat plants. 458. Mr Duffy: We would welcome any scheme that would show greater transparency or would enlighten the producers to what was actually happening in the marketplace. A lot of those prices are readily available through a number of bulletins published on a weekly basis. There are sensitivities there and we must be pretty mindful of that and how we have built up a trade in the absence of exports over the last four/five years. We watch very closely what is happening, the exact mechanism of the scheme and how it is going to work; what prices, how are they going to reflect, are they going to name customers and the price, are they going to name whether it is wholesale or retail. All of that is very complicated but we would watch it, we would welcome it, we watch it within the LMC. We already work with them on a number of issues with regard to pricing or whatever. We would not have a problem with that. 459. Mr Bradley: I think if it was introduced there would be less fingers pointed at the meat plant. 460. Mr Duffy: It would also highlight a difference out in the marketplace, where an animal which has farm quality assurance and is retail, and an animal that is not can be anywhere between £50 or £60 or £70 of a difference, and perhaps more. 461. Mr Mathers: Could I just add to that, and that is I have been in the meat industry all my life, both from working with the competent authority and then working with the industry. I think Northern Ireland has been the forerunner in this and in setting examples for other parts of world. Every week the LMC produce a bulletin and in it there are two sections — one is a forward-looking section with what prices may be next week and the other is the actual historical prices. I do not think there is any part of the agricultural industry that is better serviced anywhere in the United Kingdom or Ireland any better on prices and on the clarity of price and where they are in relation to the market than what the LMC produces every week. That is independent. That is not our prices or anybody else’s thoughts on the matter. It is an independent set-up, information that is there on which, like watching the stock market, if you watch it consistently you can see exactly the trend in the industry. 462. The Chairman: Thank you. I think that Mr. Boyd Douglas wants to come in. 463. Mr Douglas: The hearing today, there are some things that have been highlighted very much — quality products for a premium product, or premium products for a premium market, highlighted by the LMC. You say that 40 % of our animals are not up to standard. I have to say that as a dairy farmer that has been caught up in this, once you get the grants, animals coming from the dairy herd could go into beef. That is not going to happen any longer. Is there anything you can do as an association to highlight this more, to raise awareness of this serious problem that we have, because I don’t know if you really agree with the subsidies about better farming on a price for quality premium. Is there anything we can do in co-operation to help the whole industry to get out of the rut we are in at this present time so that we can have this quality product. We have that many different types of continental cattle, we have to accept that there are a lot of products out there not to standard. If you do not accept this we have no hope of surviving in the long term. Can you say is your role important in seeing the way forward in this. 464. Mr Mathers: Just before Mr. Duffy comments on that, if you go back to my opening remarks I think the whole thing has to start with not only us, we have already set our aims and our goals and our vision as I read out to you at the beginning, but we have to sit down in Northern Ireland as a whole for the whole of agriculture, not just the beef industry. The European enlargement, if you think you have problems now, personally speaking I think you are going to have bigger problems in three or four or five years time when Poland starts producing milk at half the price that you are producing it at at the moment. I think you are really going to have problems then. I think we are going to have to set our vision and set our aim, set out at the very beginning to mark where we are going and set the standards and set the quality that we are going to aim at, set our ability to trade in that area up on the top shelves of Europe or anywhere else in the world. That is the starting point to us, to set your vision and work to that. If you do not do that you are lost. 465. The Chairman: Would you say that farmers are producing a quality product in Northern Ireland. 466. Mr Mathers: Those that have gone and worked with the schemes and joined in the farm quality assured are producing some of the best products certainly that are available in the world. But some of them doing it is not enough, we really have to have all doing it. 467. The Chairman: Well, how far percentage wise have we become competitive with the rest of the markets that are fighting for the buyers. I mean, could you give us any idea of how far advanced we are overall in agriculture as a real competitive agricultural producing. 468. Mr Duffy: I think there are two parts to this. One is in terms of where are we different in terms of quality and traceability. I mean assurance, we were among the top three. Now what has happened is that others have learned by what we have done, particularly in the assurance schemes, and have copied those and improved on them. We are now very much average but, as I said earlier on, with what we visualise under the strategy we have the ability to go way ahead of those people again. That is the way we have to be thinking because if we sit where we are, we are going to go more and more down a commodity market, and with enlargement and other things and globalisation we will just be hammered. To answer the question with regard to the quality aspect of it, we are not differentiating enough in terms of our assured cattle, and the way to solve the quality problem or to try to solve it is to sit down with the producers and look at the genetics, particularly in the dairy. You cannot look at the beef sector in isolation, you have got to look at the whole industry together. There you have to look at the horizontal and the vertical aspect of that and cohese them together, otherwise what is going to happen is what has happened over the last three or four years — that there are producers out there taking what they think to be the quickest and profitable route, in inverted commas, and that has led to a deterioration in quality and sort of an intransigence on their behalf to pick their subsidies, and ignoring what the market is saying. It is incumbent on us to sit down and work it out. I honestly believe we can do that. 469. Mr McHugh: Just in relation to the whole business of visioning, and listening to the presentations this morning I would be quite angry and concerned as to where we are going to go with the visioning. You are coming at it from almost an anti-farmer point of view. That is coming across to me anyway. If you are going to go through the visioning, if everyone else is coming along with their point of view, the flashier side of the industry down to the farmer, and if you come at it from that point of view, I do not know how you intend to get to a point where the whole industry is working for the one end, in other words, a secure future. I cannot see a secure future with people at your end of the market dealing with everything beyond the farm gate, putting blame on the farmers. You talk about farmers not co-operating with quality assured, not getting everybody involved in it and so on, and not bothering about paperwork. The fact is in any industry if you do not have a return — the only thing that makes people get up the morning is returns. At the moment farmers are not getting returns. The Chairman has mentioned already you are talking about exploitation: Farmers have always been exploited to the benefit of everyone else beyond the farm gate. In fact, I would go as far as to say that it is in your interests to keep them that way. In the long term interest for the future of the industry, if everyone moves part-time, if you take everything into account, look at things properly rather than truths and half truths, we might get to a point where everyone is working for the one end. I do not think that is happening at the minute. People are blaming each other. We have a very serious situation and also a serious situation for the future. For people to come in and give us truths and half truths about the industry is not going to work. I would like to know what you yourselves are prepared to do to try to get farmers to want to go down the road of quality assured. It has done nothing or very little for farmers. Farmers are not geared for quality either north or south; you will get as much for Friesian cow beef. What about the business of mince meat, you can sell that anywhere and there is big money to be made, and it is the lowest quality and the lowest common denominator in the beef. You have responsibilities yourself, so has the LMC, people in leadership positions to take the whole industry. I want to know what you are prepared to do yourselves in relation to that instead of pointing the finger at the farmers. 470. Mr Duffy: We are not pointing the finger at farmers, we are just basically being asked what are the problems. To say that we are exploiting people and we would continue to do that because it is in our interests I would flatly reject. No farmers, no meat plants, as I said before. What we can do is there have been several schemes offered to farmers, which they have been very slow to take up, by a number of plants in Northern Ireland and this, I think, comes backs to the mistrust that is there. Yes, it is up to us to try and build on that and change on that, but the only way that is going to be done is by everybody coming together and really sitting down and saying this is what we can do, this is what the market is going to be. There is no manna going to come out of the sky with regard to increased prices. We are never going to go back where we were, never. 471. Mr McHugh: That is not the point I am making. There should be a fair cut. The consumers are being asked to pay more. 472. Mr Duffy: That is wrong, consumers are not being asked to pay more. 473. Mr McHugh: Mr. Chairman, everybody else’s cut beyond the farm gate has not dropped, that is what I am saying. They are all making a certain profit, they are taking the cut. 474. The Chairman: I think the point has been made and the point from the point of view of Mr Duffy has been answered. We have time for one from you, Mr. Ford, just a quick one, because we have three minutes. 475. Mr Ford: Thank you, Mr Chairman. You talked about quality earlier in the context of genetics, but there is evidence this morning that we are developing a split between a few full-time farm businesses and a large number of part-time businesses in the future. What I want to know is how you can encourage the small producers who we need to remain in rural areas for a viable society to get into the quality mode that you were talking about, because it seems to me your remarks have not been addressed to those 15,000 or 20,000 people that we need to keep in some sort of production. 476. The Chairman: Could you be brief, Mr. Duffy, please. 477. Mr Duffy: Coming back, the will is there at the moment. A group of people have been brought together to deal with the situation and to use the resources that are there in Northern Ireland, the scientific resources as well, to try and solve this problem and prove to the people that by producing a better quality of an animal they will reap a better reward. 478. The Chairman: Thank you very much. We are sorry the time ran out for us, and thank you for not having a long introduction because that really helped us to put more questions. Not everybody will be satisfied with the answers, but at least they got an opportunity. 479. Mr Mathers: We know what to do the next time, we will have a longer introduction. MINUTES OF EVIDENCE Friday 9 June 2000 Members Present: Rev Dr Ian Paisley (Chairman) Witnesses: Mr P Casement ) Ulster Agricultural Ulster Agricultural 480. The Chairman: The Ulster Agricultural Organisation Society Ltd. We are glad to have Mr Ian Murray and Mr Patrick Casement with us today. Could I just say to you, gentlemen, that the way we operate is that you have an opportunity to make your opening statement which can last for 10 minutes, or slightly over that if you need it, and then we go around the table and have our questions to you. We like to make the questions brief and to the point and the answers brief and to the point because we are charged with preparing a report and we have to build the basis for our consideration of this matter on that report, and it is nice to have nice crisp summaries of issues that we can build on. I am sure you will appreciate that. Welcome, thank you for coming, and we will let you make your presentation now. Mr. Murray, are you going to do it? 481. Mr Murray: No, the Chairman. 482. Mr Casement: Thank you very much, both for inviting us and giving us the opportunity to contribute to the inquiry today. We have been given five points that we have been asked to address. I am going to concentrate and focus on the final point, the contribution that co-operatives can make to the industry, but in doing so I hope to cast light, if you like, on the three other points above that. I am afraid the first point we feel is probably rather outside the remit of our organisation and we will not be making any comment on that. 483. The Chairman: That is all right. 484. Mr Casement: I want to illustrate the contribution co-operatives can make to the industry by a description of the activities of the Co-op of which I am actually Chairman. This is an organisation called Greenglens Marketing based in the Moyle area. It started eight years ago as a buying group, tendering for commodities for its members who bought the stuff individually but agreed to take them from a common supply. This has reduced the cost of inputs, the major inputs into our farms, of up to 15 %. We have brought our feed stuff, fertilisers, fuel, fencing materials, veterinary products, and various other items in this way, and also purchased in services, including sheep scanning, cattle scanning and freeze-branding for our cattle. This is a major saving of the input for any farmer. We have branched out into lamb marketing, and along with other lamb groups we have been supplying lambs directly to the abattoir. Through our efforts we are rewarded for our quality and therefore have a direct input into improving the products that are available. We reduce the marketing and transport costs by working together. We save a lot of time by not having to spend hours in the markets. We have the ability to respond to market demands through the rapid feedbacks from the meat plants. We have the ability to negotiate with the meat plants about matters pertaining to the carcasses and so on. It shortens the chain between the producer and the consumer and it improves the quality of the carcasses that are available to be sold to the consumer. They have a longer shelf life and are a better quality product. The co-operative provides a focus for education and development of the farmers within it. We have run many training courses with the Department. We have talks and discussions; we have set up a grassland group which improves the way we manage the grass on our farm; we have organised visits to our agricultural colleges, both in the North and across the border in the Republic; we have looked at alternative methods of marketing our products, such as suckler cows and store lambs which are traditionally sold though livestock markets. We are faced with the closure of one market locally in Ballycastle so we have had to look at alternatives for that. We are setting up a skills register among our members so that we can exchange labour and equipment and so on among our members at a time when there is an acute labour shortage for skilled stockmen in the area. We have been able to source among ourselves and between ourselves access to each other’s skills. We are involved in a rural development initiative (Gardiner will be aware of this) on a rural heritage project, looking at trying to get ruined buildings of various sorts back into use in the countryside. This is in its early stages. I was talking yesterday to the Heritage Lottery Fund and they are extremely excited by this and are keen to fund it, and it is through our co-operative that we are looking to source the money. Finally we are moving on to work outside of our own group but with other groups of farmers on a larger scale. We have combined with several other groups to supply a rural support officer who is helping with these various rural development initiatives, and looking to source finance and funding for projects that we wish to carry on. We are working together with other lamb groups in the Province starting up a group called the Ulster Lamb Group which has various functions, including a sort of education dissemination of knowledge, but which is hoping to move on and provide the lamb groups with a real marketing power within the sale and distribution of lambs. It is early days yet but it is making progress toward that. It is interesting that within those lamb groupings there are some members who are co-operatives and there are some that are not. The ones that are co-operatives have all been able to build up not necessarily large but some capital resource, those who are not co-operatives have no funds whatsoever at their disposal, which is hampering perhaps the activities in some of the groups. In seven years we have achieved that. We have grown to 75 members. The opportunities that are available for larger Co-ops that have existed for longer, such as many of the dairy organisations, are much, much greater and many of them have taken advantage of it. Many of you will be aware of the very exciting and ambitious Biogas project that Fivemiletown Co-op are trying to develop with the help of ourselves in UAOS, and there are other examples of other organisations moving into other schemes with great benefits, potential benefits for their members. However, I would stress that co-operatives do not appear just spontaneously out of nowhere. Development work is vital, both to get them off the ground and to continue with the development. Some Co-ops need support, they need legal advice, they need advice on employment, they need advice on training. This is carried out by UOAS, the body that we are representing today, and its dedicated staff. 485. Mr Casement: Now, your inquiry today is looking into the problem of indebtedness. Inevitably the agricultural recession has hit co-ops as hard as it has any other organisations and individuals in the Agriculture industry. They are all, whatever their activities, all co-ops are showing downturns in turnover, many of them have moved from profit into loss in the last 2 years. We are also facing the problem at the present moment of the hiatus in European funding which has put a halt to many rural development initiatives that we might be involved in and other development initiatives because there is no external funding available and internal funding from the co-ops is assured. This means that all member co-ops of UAOS have less to give by way of affiliation fees to UAOS itself and the parent body (ourselves) is now facing financial difficulties as well. This is creating a major problem for the continuing work of co-ops. I hope I have given you some flavour of what co-operative action can achieve in a rural community but I would stress that it requires a guiding hand and I think that UAOS are the only people who are in a position to provide that, and it is very difficult under the present circumstances. 486. The Chairman: Thank you. Well I am sure our members will be quite alarmed that your organisation received no subsidy from Government, I think that is a very alarming thing. I might say that your colleague did bring this to my notice. I have told him that he needs to make representation again to the Government and pass on his representation to this Committee. I am sure that we would like to look into that because your sister organisation across the water is subsidised. It seems to me that there is discrimination here from the Department who try to tell us, I suppose, that they do all the work. Well I mean I do not think they can do this work. I think that what you have reported of some successes, especially in the greatest of all constituencies, North Antrim, is of course very pleasing to me personally and I am sure to my colleagues around this table, but that is a matter for another day. But I think we need to put that firmly on the record that here is an organisation who gets nothing from the Government yet is pushing away in self help efforts to do what needs to be done all over the province. 487. I have a couple of general questions I want to put to you. They are rather judgmental but the fact is we need to have answers to these types of questions. How adaptable has the Northern Ireland farmer been to changes in consumer demand on quality and type of produce? If your answer is relatively quite good, could you give us some examples. If they have been quite bad could you give us such examples. 488. Mr Murray: I would again refer to the Lamb Marketing Co-operatives and in particular one which I am actually Secretary, which is Strangford Down Limited. It has worked very successfully over the past five or six years with WD Meats in Coleraine. They have built up a trust together and every member gets their grading back on all lambs so they can then use different, better quality rams to improve grading if it is poor, and grading figures have shown improvements over the years. It has now got to the point where they are, in fact, able to market their own lamb under their own brand name of Strangford Down through some of the supermarkets within their own home County. We believe this is taking on board what the consumer requires and is a good example to others to try to please the local consumer with local produce. 489. Dr Paisley: So you would say that in Northern Ireland farmers are making an effort, even with all the darkness overhead and dark clouds, they are making an effort to supply the consumer with the right sort of article and also to improve on it? 490. Mr Murray: I would certainly say that within the lamb industry. I think maybe there are still doubts within the beef sector and for my sins I am also company secretary of AI Services Northern Ireland Limited who, I think, may have addressed your Committee in the past. There is certainly great concern among that organisation about the number of bulls in the province and the number of bulls of, dare I say, dubious quality. 491. The Chairman: Thank you very much. Now, do you think that Northern Ireland produce is being marketed effectively? If you do not think that, could you suggest to us ways of improving that? It is a broad brush question because really we need to have these questions answered to build on our reporting. 492. Mr Casement: I think like many things there is a mixed bag here. I think some products are being marketed extremely well and others are being marketed extremely badly. I think we have failed to a large extent to capitalise on our, if you like, clean green image in Northern Ireland. I think more could be made of that. I would like to have seen more initiatives on trying to market, for example, we have talked a bit about lamb today because there is quite a lot of experience, that has been a relatively successful story, but I think it could have been much more successful in that we could be marketing the lamb abroad in some of the ways in which beef was marketed abroad before the beef ban where we had set up links with supermarkets on the Continent and so on. I think perhaps more could be done to do the same sort of thing with our lamb coming from much the same sort of farm, many of the same farms with the same sort of quality, same sort of lack of environmentally harmful inputs into those farms. So much more could be done in that way. 493. Mr Murray: If I could add, Chairman, I think too that quite a large portion of our produce currently are with what is known as the commodity markets. I think there must be an opportunity to become more innovative to promote Northern Ireland products, a lot of it goes into own brand marketing and it is not actually recognised as produce from Northern Ireland. I think there must be scope, we are not big enough to compete with the South Americas in terms of commodity beef products, for example, so we must look at innovation. 494. The Chairman: Right, thank you. One final question I want to put to you, do you consider the increase in major supermarkets, retailers, in Northern Ireland has undermined or has it strengthened the agri-food industry? I know it is a leading question, these are the things that we have to put to people, we want to know the attitudes of organisations to them. 495. Mr Casement: I would be inclined to feel that it has undermined it to a certain extent because of the point that Ian has just made concerning the own brand, that they always wish to put their brand on it and there is then a lack of identity for our own product here. I feel that this is a major problem and it is going to create further problems if we wish to add quality to our product; add value to our product, is that we are going to come up against this, the constant desire to put their own brand name on to it and to avoid other brand names. It makes it very difficult for us to make inroads into markets outside of the province. I think some of them have done better in ensuring that they source their products here in Northern Ireland to sell in Northern Ireland, but I am afraid because we produce so much more food than we can eat we have to look well beyond that all the time. 496. Mr Murray: I think also Chairman in the sourcing of it they have put pressure on the margins on the farm, there is no question about that. Also this idea: "we want one Supplier." 497. The Chairman: That is the sort of feedback we are getting, yes, thank you very much. Now we come to some of the questions from my colleagues, first of all Boyd Douglas? 498. Mr Douglas: Thanks Chairman, I think at face value you told us this morning you’ve reduced costs by 15%, you have improved the marketing, reduced costs for transport and this type of thing, more or less talking better quality for premium prices. In some ways by organising the market for your lambs and beef you are guaranteeing a fixed number of stock to meat plants on certain days, something that concerns some people a little, could you say that you are receiving better prices for your stock above those outside the co-op or do you feel that power of your numbers has benefited the whole Northern Ireland industry? 499. Mr Casement: I would say that at times we have certainly managed to get much better prices than other ways, methods of marketing, but not invariably. There have been distortions in the market caused by the movement of lambs to the Republic of Ireland over the last few years, there have been ebbs and flows in that trade and that has sometimes distorted the live market price. There are also different requirements for the lambs on each side of the border with regard to the grading systems and so on that pertain in different meat plants on each side of border. So it is quite difficult to answer that but I think consistently we have been able to achieve the same sort, at least equivalent prices and often better prices, and we are producing a lamb that the market is looking for rather than just selling commodity lambs, aiming at the upper end of the market. I am sorry, I have lost the other half of your question. 500. Mr Douglas: Just basically then do you feel that the power of your numbers and co-ops are helping the whole Northern Ireland industry? 501. Mr Casement: I do not think we have caused a major problem to anybody else in the industry in that I think it is important probably there are varieties of ways of marketing produce: that is important, there is not just one, so there probably is not room for everybody to be marketing their lambs this way, but there are always going to be lambs, even within our organisation and within lamb marketing groups, there are always lambs that are not suitable for the market the lamb group is trying to supply, if you like. So even within the group there are always lambs that are going to have to find other outlets. I do not think we have caused a problem in that sense. 502. Mr Murray: I think too Chairman, it is also important to remember that the co-operatives marketing lambs to meat plants have to meet very stringent quality requirements. If you like there is a negotiated deal at the start of the season and there are bonuses paid, but they are very much placed on high quality. There are also very stringent penalties where the lambs do not meet that quality. 503. Mr Douglas: Thanks, Mr Chairman. 504. The Chairman: Right we come then to yourself now? 505. Mr McHugh: I welcome the opportunity to speak to the UAOS partly because I have a belief that there is merit in the whole business of co-operatives. I think we talked earlier to some of the others, the exploitation of farmers has always been partly because of their own idea of staying as individuals and not becoming organised, that has certainly worked in the present climate to their detriment. It was mentioned by one of the other groups, earlier on in one of the presentations, that there has been little evidence so far to show that co-operative farming has achieved any success. I am just saying that if you benchmark that against DANI’s success at farm level at the present time, you know, you could start to ask questions too. So my question would be in relation to the lack of organisation before the farm gate, everyone else beyond the farm gate is organised virtually against the interests of the farmer in many ways in terms of returns. So I am wondering what you can say to us in terms of taking things from here and I think this is a particular time when farmers should get organised and perhaps look to the role of co-operatives or the UAOS. I am also concerned by the fact you are not funded in any way, that has got to be a great detriment to success, but you are doing some good work such as the work at Fivemiletown, I think there is a good future in that. I am just wondering about your ideas of how we could take things forward in the present day and in the new situation? 506. Mr Murray: Well I think we have circulated the list of our achievements in bringing people together. Unfortunately the Northern Ireland person is a trifle independent by his nature and the history of Marketing Boards also stymie development of voluntary co-operatives. I think you have referred to our funding, I think that is something that needs to be put right, to at least have the staff on the ground to meet the farmers and encourage them to come together and demonstrate the success of examples. I think we also do require perhaps a more positive approach from the industry beyond the farm gate to farmers being brought together to market their produce. I think that is also very important that there is encouragement from there to do that. 507. Mr McHugh: Mr Chairman, I would say that is a key point, if others beyond the farm gate are not to work in isolation. At the end of day we all need farmers, we all need produce and if you get enough part-time farmers you will find that in the years to come we may have no industry at all and everyone will be out of a job, but I think it is key in the idea of provision for the future that people beyond the farm gate, meat plants and supermarkets, the consumer side of it, all need to work together and I think that yourselves offer a good part of that. I think I would like to see something being done in relation to organising farmers at their own level. 508. Mr Murray: Chairman, if I might just add that we have, believe it or not, since March 1998 when, at the Department’s behest, we were asked to meet with a Steering Committee of pig farmers and with the Chairman and Managing Director of Scotling, the Scottish pig market co-operative, we have since then had 40 meetings with that Steering Committee, we have had a number of meetings with, in particular, the Malton Bacon Company to try and progress a contract and bring a very substantial number of pig farmers together who would wish to supply pigs of good quality and kept under good environmental and animal health conditions. Alas, as I say, we still have not got there despite having 40 meetings, quite a number with that company. 509. The Chairman: We are actually meeting them this afternoon. Of course, the pig industry has gone right down into the darkest shadows as we all know, but we are encouraged that meetings are taking place and we have got to work at it and not give up because it would be a tragedy if we lost our pig industry. That is what it has been heading for. Indeed, I have said on deputations and my colleagues have said: Does the Northern Ireland Department want to get rid of the pig industry? Because we have looked upon some of the decisions they have made as if they did not mind whether it went into a state of demise or not. I think that is very serious and it is a matter that concerns us all. My Deputy? |