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PROCEEDINGS OF THE COMMITTEE (Continued) 593. The Chairman: Thank you very much. We, of course in Northern Ireland, are interested in the future of your firm in Northern Ireland because more or less now apart from smaller firms you are in the monopoly situation. What we have asked you to tell us, what is your idea of the future of the pig industry in Northern Ireland as concerns your own firm and what is the likelihood of your firm leaving Northern Ireland — you will excuse me, I must put these questions — your firm leaving Northern Ireland. Those are the things because as you have said we really are in a different ball game now. The news that you are giving us from the Continent is not helpful news nor the news in the global sphere is not helpful. Could you help us on those two issues? We have to do a report for our Assembly and the report is interested in getting us out of the mess that we are in, but it is also looking for recommendations. There is no use us being strong on diagnosis, which we all are, and not strong on proposals and prescriptions. So we need some prescription to say this is the way we should go in the future. Could you help us on that? 594. Mr Hilliard: I think the one line, coming to the particular point secondly on our position because I think it is fundamental on the profitability, we have got to address the profitability essentially of the industry and what millstones we carry that make us uncompetitive against the Dutch and the Danes. Malton’s history, coming back to Malton, is that as a company we are primarily set up to supply added value pork, bacon and ham products to the major UK retailers and some sales in Europe. Consistently up until 2 years ago for the preceding 15 years, we have demonstrated that the efficiency of British pig farmers combined with our efficiency as a processor meant that we could source domestic pigs, slaughter them and that material enter our further processing chain cost-effectively against imported material. Now, I almost feel as if we have got one hand tied behind our back with meat and bone meal, we have got one hand tied behind our back in terms of currency rates and not only do we have both hands tied behind our backs, we are almost in a strait jacket, we have just got everything going against us as an industry. I believe as an industry we can compete with Europe as currency is starting to come back in our favour, but fundamentally the main change that has got to be effected to put us on a level playing field is we have got to see either compensation for the £5.25 BSE impact on the pig industry or we have got to see that restriction lifted so that we can be adding value back into that fifth quarter, as we would refer it to, because without that one has to be concerned about the size of the cake, if I can put it like that, because all we are seeing at the moment is the unprofitability that has been experienced by the producer for a period of time now switching to the processor. What we have got to do is create a status quo where the cake is large enough for both facets of the industry, the producer and processor, to have enough money and make that cake large enough to divide between the two parties. If there is one thing we could change on a wish list it would be addressing the impact of this meat and bone meal exclusion. I believe that without that millstone around our neck then effectively we will still continue to have a British pig industry without doubt. 595. The Chairman: Now, you are talking about the British pig industry, we want to talk about the Northern Ireland pig industry because what farmers are saying to us, Mr Hilliard, is very simple, they produce a high class commodity which your firm has been buying for years, we know that, but they do not get an equal price here for that pig as their colleagues across the water get for that pig, that is the big thing that they say. Now, I do not want now to go into the past, the water is under the bridge and there are many things that could be said, we are trying to get something to save our pig industry. Now our pig industry cannot be saved except we have a levelling of the playing field, that is how we feel. So we would like you to give us your comments on that, why is it that the farmer, the pig farmer in Northern Ireland, produces an equally good pig — he will say of course it is even better and I, being the representative for Ballymoney, would say the Ballymoney pig is a special pig, but the situation is this, and it is very important, he does not get the same value as a man producing a similar pig and maybe in his opinion maybe if Malton were going to be absolutely honest we would have to say in some ways: You are right, your pig is better, but he does not get the price. Now the other matters, the strength of the Pound, is something beyond us and having sat for 20 years in Europe I cannot see the British Government now having a push in their economy prepared to do what Wilson did or Callaghan did and devalue the Pound, that is not going to come. If the slight change that has taken place goes on perhaps fairly far away, not near hand, there may be some equalisation on this matter, but that is not going to come. The other one that you are mentioning which you say ties your hand is the meal. That is getting more and more difficult with what is happening now, a campaign in Europe, which is going to, I think, swing the green lobby against that completely. 596. Mr Hilliard: A chance to answers those points you have made? 597. The Chairman: Yes. 598. Mr Hilliard: First of all, I would sit here and say that net net a producer over here returns a similar price as a producer returns in England. 599. The Chairman: I think the figures, Max, I think you need to look at those figures again. Of course, I haven’t the figures before me, but I think that I could produce figures that would show that they are at a disadvantage. 600. Mr Hilliard: I think, with respect, at a top line figure you would identify that there is about a 5p premium that we have in England compared with here. I think what you then have to do is compare apples with apples. First of all, the contract that we pay, we measure pigs on millimetres of back fat, so we are grading the carcass in terms of quality. The top line price that is referred to, what we pay in the UK, actually equates to a tighter grading than the grading of pig that we purchase here. The second point would be here there are contributions made to the transport from farm to slaughter house, that is not made in the UK. There are then deductions that are made in the factories for grading animals and antemortem inspection. Those deductions are greater than the deductions that we make at the Cookstown factory. So I could certainly put in writing to you following this meeting how the 5p is made up so that I am able to say to you net net it is similar. 601. The Chairman: Well I am afraid around this table we would not agree with you. I would like to see those figures, they would be useful for us. 602. Mr Hilliard: I can understand how the misunderstanding arises because we are talking about a top price in England and top price in Northern Ireland. When we bring it down net net, because effectively that is the way we have got to look at it, if historically transport costs have been contributed to here and historically there have been higher deductions in English plants, you have still got to bring it to net net. Effectively there is no difference. 603. The Chairman: Well, I do not think that would convince farmers here but never the less we would like to see your figures, it would be helpful to us. 604. Mr Hilliard: Yes. 605. The Chairman: The other one, just on the Pound, would you not agree that it is hardly likely that we are going to see a movement on that? 606. Mr Hilliard: I totally agree, but I think with the efficiency of producers and the efficiency certainly of our business then I believe that we can hold our own, even if currency is going against us. What we cannot do is fight that battle and also have the meat and bone meal. We have to see the £5.50 which equates to half the losses that producers have sustained over 2 years, that is the playing field that we have got to have levelled off. If that is not levelled and we still have a hardship with the Pound then one has to worry how low the UK figures are going to go. 607. The Chairman: Right, thank you very much. Mr Gardiner Kane? 608. Mr Kane: Yes Chairman. Mr Hilliard, what outlets are available to pig farmers who do not have access to the local bacon factories? Does Malton intend to re-establish the premises at Agivey, Ballymoney for the future of the Northern Ireland pig industry and agriculture in general? You appear to have written off the pig industry, sir, do you see a viable future for pig farming in Northern Ireland? If so, how can this be secured? 609. Mr Hilliard: Well I do not know what evidence there is to say we have written off. We have invested in our processing facilities and having a viable pig farming supply base is essential, fundamental to the structure of our business. I would make the point that we have only just finished an investment, albeit for only half a million pounds to actually increase the slaughtering capacity at Cookstown, to make sure that we are actually able to take more pigs into the plant. So for a factory that was slaughtering around 12,000 pigs a week on average when we took it over less than two years ago we have increased the running capacity to 18,000 pigs a week plus, we are steadily increasing the kill. We are actually making investments in the Cookstown plant to be actually able to handle more pigs and make the plant more efficient. The prices that we pay, I still maintain, are consistent with the prices that we are paying in England. They are very much subject to the supply and demand and the competition threat of imported material. I think if we can almost forget looking in the past and actually look at prices today, prices today are at break even for most producers and with a forecast from myself because of the tightening supply basis then we are actually going to see prices continue to move up over the next weeks. That is clearly going to be a welcome relief to producers who have sustained substantial losses. But the issue will be, and I predict that more people will start to increase their herds as profitability returns, the status quo in terms of a viable industry can only be achieved if we sort out the meat and bone meal cost to the industry. 610. The Chairman: Those pigs that you are slaughtering in Cookstown, how many of them are from the Irish Republic? 611. Mr Hilliard: Answering the question quite openly, three weeks ago we would have found ourselves slaughtering about 14,000 from the North and 2,000 or 3,000 from the other side of the border. What we actually have seen is a drop-off in the availability of Northern Irish producers. Whether that is producers going out of business or whether it is taking advantage of a great demand from down South I do not know, but what is interesting now is that we are seeing a few more pigs re-appearing from North of the border because of the way Sterling has moved against the Punt. So it is quite difficult, pigs were travelling South up until quite recently with the exchange rates and I expect more pigs to stay in the North and that will increase the percentage of Northern Irish pigs we are putting through our Cookstown plant. 612. Mr Kane: Just to add on to that, Chair, if I may, my understanding from pig farmers is that there was one week, Mr Hilliard, that you did not have an in-take at all from Northern Ireland, that it was from Southern Ireland that the pigs came in on that particular week. Also you have not answered my question, sir, in relation to Ballymoney. Thank you. 613. Mr Hilliard: To answer the first part of that question, that is absolutely incorrect and utter rubbish, total misinformation. 614. Mr Kane: There may be an opportunity for me at a later date to supply you that information. 615. Mr Hilliard: I can tell you that information is totally wrong, absolutely utter rubbish. 616. The Chairman: Right. Could you answer the other question about the future of Ballymoney? 617. Mr Hilliard: With regards to Ballymoney, first of all, any investment decisions that we make have got to be premised on where we arrive at in terms of believing that there is a viable Northern Irish pig industry going forward and what numbers there are going to be. It is unlikely in the short term that we will be recreating a green field site, whether that is at Ballymoney or anywhere else. We have sat down and had discussions with the IDB, it’s important to test the water. On the face of it somebody might say it is putting money in the wrong place by investing into the chilling capacity at Cookstown, but it is a good example of being well positioned so that if there are more pigs to kill we will kill them. So at the moment our short term to medium term investment will be increasing the capacity at Cookstown to accommodate greater numbers of Northern Irish pigs rather than creating a second site against the uncertainty of what pig numbers are going forward with another set of site overheads. It has got to be more cost effective to stick with one site short term and see what comes out of next year. 618. The Chairman: Mr Hilliard, we had the Ulster Agriculture Organisation Society with us this morning, and they said they had a series of meetings with you, but no real outcome came from those meetings. Would you care to comment on that? That was they had meetings with you and others concerning the future of the pig industry and what should be done now and proposals made, but there was really no response from your side of the table. 619. Mr Hilliard: Well I happen to attend many meetings and forgive me, in terms of exactly what banner I have been having various meetings, but I am not aware of having any meetings recently. The closest communication we have been having with Northern Irish producers is about setting up a large co-operative to try and get the synergies between a co-operative group marketing pigs and our own working more together. 620. The Chairman: That would probably be the meeting. 621. Mr Hilliard: First we have had, I think one might say, three meetings, one was quite a while ago to cover the groundwork, to establish whether they could apply for a marketing grant to set up the system. It went quite quiet for quite a while. We have had a second meeting and at our cost we have invited all the leading players of that organisation over to Malton. It has been very much focused on us telling them what we are looking for as a product. I do not want to bore this meeting with the facts and contest that perhaps the Ballymoney pig might not be the best pig around, we have paid for about —- 622. The Chairman: It might not satisfy the Chinese or Japanese. 623. Mr Kane: Closer to Southern Ireland. 624. Mr Hilliard: We have invited eight or 10 people of that Association across to Malton, we have shown them Irish material going down the slicing line and the complications it is causing us, we are genuinely working towards contract supplies of pigs coming into Malton. It was not more of the macro about what we have to do within the industry, almost along these conversations. 625. The Chairman: Right. Mr Ford? 626. Mr Ford: Yes, Mr. Chairman. Just following up, could we ask whether you expect to be engaging in any contract with the United Pig Producers Co-op in the near future on the basis of those discussions, or whether you think it has merely been a demonstration of the product you are looking for and you are leaving it to them to carry on and do things. 627. Mr Hilliard: No, I certainly envisage working closely with that organisation. I see great synergies in it being set up. We have known several of the individuals for the few years that we have been over here, we can work well with them. We have identified common targets. I am sure if we were revisiting the topic in a year’s time, then one would find in place working contracts securing pigs and giving a consistent price for consistent deliveries. 628. Mr Ford: Can I turn to two of the problems that you raised. You mentioned a number of times the meat and bone meal ban. You also talked about higher welfare standards in the UK. I think I would probably share the Chairman’s concerns that the meat and bone meal ban is likely to be intensified across Europe on a scale and not removed, or perhaps if it was equally applied across Europe that might reduce your differential. Also can you tell us in terms of the higher welfare standards, have you sought to use that in any way in your marketing to ordinary consumers, or have you merely addressed the concept that you are marketing a bulk commodity, rather than marketing a superior commodity because of the higher standards it is produced to. 629. Mr Hilliard: To answer the first question, to a certain extent I do not mind which way the playing field is levelled but it needs to be levelled because we cannot sustain eight pence a kilo difference between our costs and those in Denmark and Holland. In terms of the welfare, I think really the pig meat industry was slow in taking up the opportunity of marketing the improved welfare that the unique legislation forced upon it. The marketing gurus of organisations like the LMC tell us that you should not communicate directly to the consumer aspects of what happened on the farm in terms of extolling the better virtues of a pork chop or a rasher of bacon. When the legislation took effect and had an impact on UK supplies from 1st January 1999, if we had had the sort of campaigns that are currently running then I think we would have been in a stronger position to maintain the price differentials of British material over and above the EU’s. That was not the case and really what happened over the first year to 18 months was we gave the opportunity to the Danes and the Dutch to turn over small percentages of their herds to meet those standards. Quite frankly, there is a plentiful supply of Danish material, 15% of their herd, and a similar equipment percentage within the Dutch herd that meets those two UK legislations. The argument now is no longer necessarily on nationality; those countries are producing the same product. Therefore the difference is welfare rather than just nationality, and it is very hard to communicate welfare to somebody who does not really want to be reminded of what happened on a farm when she makes her purchase and eats a pork chop. 630. Mr Ford: Are you satisfied with the current marketing campaign or do you think it is leaning in the wrong direction. 631. Mr Hilliard: The current one in terms of the pictures? 632. Mr Ford: She is feeding them and now she will be fed to them. 633. Mr Hilliard: I think I share the concerns of our customers, the major retailers, that it could very easily have a negative impact on total pig meat sales. I think it is the sort of thing quite frankly that we ought to have had in our armoury just over two years ago, and it is the sort of thing that ought to have been a veiled threat to the retailers — that unless they had lots of British material on the counter then this is the sort of the thing that our industry would have hit the ground with. The problem is that we have given the Danes and the Dutch time to catch up. There is a sufficient supply of the equivalent standard, the scaremongery might run the risk that it dampens demand on the whole pork category. 634. Mr Armstrong: Would you be willing to enter into contracts with pig farmers in Northern Ireland that had pigs of the right sort of quality that you require to keep a viable pig industry in Northern Ireland and recover for those farmers a price for the pigs that they would be in a profitable situation, since you are an international company and we do not have a company in Northern Ireland that is known to us and identifies what Northern Ireland needs. We would like to have some company in Northern Ireland that would think of the Northern Ireland farmer instead of thinking of making profit on a worldwide base, because the Northern Ireland farmer would be there to produce a profit and have a viable industry in our area. 635. Mr Hilliard: The short answer to that is we will be offering the same contracts over here that we have in England. 636. Mr Armstrong: We do not have an industry or a person of your calibre in Northern Ireland to look after the pig industry, to make sure there is a pig industry here. In other words, the pigs could be got somewhere else, it is not priority to have a pig industry in Northern Ireland. 637. Mr Hilliard: No, we are making investments into the Cookstown plant, and as an operational manager I want that plant to be running at full capacity. We will be looking to do everything that we can to make sure that those pigs are procured in a consistent number week in, week out. It will be more on a contractual basis. 638. Mr Armstrong: Is there any way that you can encourage those farmers to do that and then be in a profitable situation. 639. Mr Hilliard: Sorry? 640. Mr Armstrong: Is there any way that you can encourage the farmers to enter the contract with you so that they are in a profitable situation instead of non-profitable. 641. Mr Hilliard: I think it is pretty up-to-date information, but I think if we are looking at the prices that are around this week or next week the pig industry here is returning back to break even. One has to remember that there is quite a wide range of break even points according to the levels of efficiency of farms. Therefore, it is quite difficult for me to say every farmer would be back into profit. That is not quite the point this week and next week. But I would certainly forecast against the falling herd size and the rise in price of the simple supply and demand equation. I would anticipate that almost every pig producer will be enjoying a profitable situation in the following weeks. 642. The Chairman: PJ. 643. Mr Bradley: Thank you. It is nearly on the same lines as the last question. If the pig industry here never recovers, what do you honestly believe that would mean in economic terms as far as Unigate, your parent company, is concerned. 644. Mr Hilliard: I just don’t think along those lines. As long as the politicians can make sure that we can operate on a level playing field, I know that I can process material just as efficiently as any Dutch and Danish plant. I know that the pig farmer here and in England is just as good as his Dane and Dutch counterpart and putting the two together there is no reason to have negative talk like that. What we have to do is address how many hands and how many straightjackets we are in as an industry at this point in time. It should not come down to that. We have been thorough a crisis and an enormous amount of money has been lost. We are currently handicapped because of the £5.25 meat and bone meal, but we are coming through it. Regrettably, and I do mean that, regrettably a lot of farmers have gone out of business. We have seen the downsizing of the herd. But those people who remain in the pig industry have come through it. Clearly they have got large debts behind them, but at least we have got to that crossroads where we are back to a break even and the price is continuing to rise because of the reduction in number. When more pigs come to the table, if I can put it like that, because profitability is returned what you must do is make sure that we have got the opportunity to fight on a level playing field. 645. Mr Bradley: You are confident that you can keep it on board. 646. Mr Hilliard: Yes. I do not think I particularly answered that. I did not dodge that first question, I guess there were so many points to answer. We have got no intention of pulling out. We had that crossroads of the decision-making process when we had the disastrous fire at Ballymoney. We had the insurance money; it would have been very easy to take that money and run. We pledged our presence to the Province; we made a pretty high investment expenditure into acquiring Unipork, and we are currently investing into the Cookstown operation to be able to process more pigs. 647. The Chairman: Mr. Dallat was not able to be with us this morning so we must get him in. 648. Mr Dallat: Mr. Hilliard, you made reference to your working closely with the IDB earlier, many of my constituents lost their jobs when the Ahoghill plant was closed. What notice was the IDB given before that closure was announced. 649. Mr Hilliard: 24 hours. 650. Mr Dallat: Two hours, but I do not want to be accused of talking rubbish. Really my main question in terms of adding value to pork product, is your company investing in research and development to improve the quality of material offered to the consumer (and I am thinking in particular of dry cured, things like that) which would put your product well ahead of the rather inferior stuff that comes in from other places. 651. Mr Hilliard: The company at the moment produces the full range from pre-packed pork chops, marinated and barbecued rib steaks; when we talk about bacon rashers we do dry cure, we do sweet cure. At the end of the day we have to supply what our customers want, and people are very much cost conscious and there are price points to be hit. Therefore we will be serving the major UK retailers with a whole range of the products on the shelf. Somebody can chose between a value economy packet all the way through to a finest range and a value range incorporating dry cure. We already do that. But I think to answer your question with an industry hat on, what we have to do is try and put resource into balancing the carcass better. If you were to ask me what you would have changed in our industry had you known what was going to happen, the thing that hit us with the greatest impact was the fact that we relied on so much of that material going not to the UK retailer but to foreign processors. Over here we have such a demand for the leg for gammon joints and hams, the loin part of the animal for pork chops and bacon, and yet we rely alone on exporting bellies to lardon manufacturers in France or to processing factories in Japan, shoulders going out onto the continent. What we lack is a traditional charcuiterie type demand from the consumers from all those things that complete the balance of the carcass. 652. Self criticism would say what we have got to do is NPD work in finding new products for those parts of the pig. The pig in lean meat protein is just as cost effective and can stand up against poultry or any other protein. We have to stop looking at it as almost Victorian categories of pork, bacon and ham, and just see it as a processible protein. The NPD work I referred to has got to go into creating new products for the parts of the pig that we don’t traditionally eat over here. 653. Mr Dallat: Is that taking place in Cookstown? 654. Mr Hilliard: Our central NPD resource is actually in Malta. Cookstown is very much focused on slaughtering pigs, doing it well over here and getting the material into our other plants. 655. The Chairman: My Deputy Chairman, Mr. Savage. 656. Mr Savage: Mr. Hilliard, now we have got a commitment from you that you are here and you are going to stay, there is one question I would like to ask you and it is the basic down-to-earth question that everybody wants to know: How can we get our pig industry back into a situation where the farmers are getting a profit and you are getting a profit. What do you say is the way forward? 657. Mr Hilliard: We have accepted that we can’t do anything about currency. If you can sort out meat and bone meal for us, that £5.25, quite genuinely the farmer and processor can sort the rest out. If there is just one request on the wish list to put us on the right road again it is sorting the £5.25 out. 658. The Chairman: Well, there will be a bit of controversy over that, but that brings us to the end. We could have done with another hour but I am sure you are glad you don’t have to sit here. Thank you for coming, we are grateful to you and we would welcome any correspondence that you would like to give us, especially on price figures. That would be helpful to our final report. 659. Mr Hilliard: Thank you very much, thank you. Appendices to the minutes of evidence The Co-operative Wholesale Society (CWS) Appendix A Dunnes Stores Limited Appendix B Marks and Spencer Appendices C & D Musgrave SuperValu-Centra Appendix E Safeway Appendix F Sainsbury’s Supermarkets Limited Appendix G Tesco Appendix H Livestock and Meat Commission for Northern Ireland (LMC) Appendix I Northern Ireland Meat Exporters’ Association (NIMEA) Appendix J Ulster Agricultural Organisation Limited (UAOS) Appendix K Northern Ireland Poultry Federation (NIPF) Appendix L Northern Ireland Grain Trade Association (NIGTA) Appendices M & N Wilson’s Country Limited Appendix O Appendix A COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT 18 January 2000 Procurement Policy I am sorry I was unable to respond to your letter before 17 January 2000, but I can now confirm we would be happy to meet the Committee and/or attend public hearings. I should begin by explaining that Belfast Co-operative Society has traded for over 110 years but in 1983 it became part of CWS. We operated 31 stores in Northern Ireland and have a Head Office and distribution centre at Carrickfergus. Procurement policies are determined by CWS buyers in Manchester; their pricing policy with regard to Northern Ireland is quite clear: we aim to source as much as possible of what we sell in Northern Ireland from Northern Irish suppliers. Overall, about a quarter of what we sell is bought locally which is worth about £18m a year. In addition, a similar value of business is sourced in Northern Ireland but is shipped over to sell through our stores in Britain. With regard to potatoes; all the potatoes we sell in Northern Ireland are bought locally – although obviously if there was to be a major supply problem we would have to supplement local supplies with stocks brought over from England or Scotland. Our sole supplier is Wilsons Country, 33 Mahon Road, Portadown, Co Armagh, and we would have no objectin to your contacting them on this matter. Generally speaking, we do not force mainland varieties on to our Irish customers, and we sell varieties such as Comber or Red Rooster, which are not available on the mainland. We do, of course, also sell certain varieties – Cava, Estima, - on both sides of the water. Referring to country of origin labelling, our corporate policy is again clear and we would never mislead by saying a product was "packed in Northern Ireland" if it was not also grown in Northern Ireland. In that connection you may be interested in the attached note I wrote to the Minister of Agriculture last October, with its accompanying Code of Practise, which I commend to your members. If you would like any further information please do not hesitate to contact me. Yours sincerely
W D SHANNON NORTHERN IRELAND PRODUCE PROCUREMENT The Co-op began trading in Northern Ireland over 110 years ago as the Belfast Co-operative Society which became part of the CWS in 1983. We currently operate 31 stores and have a head office and distribution centre at Carrickfergus. Procurement is undertaken from our centralised buying function based in Manchester. We spend approximately £18m a year in Northern Ireland on Produce which is subsequently sold there, and a further £18m on produce which is shipped to the mainland for sale therein. CWS Farms group is the largest farmer in the UK farming some 80,000 hectares of land. As a result, we are acutely aware of the crisis in the farming industry and are happy to send senior personnel to your agricultural development committee meeting. Our representatives today are: David Anderson, Chief Officer, Northern Ireland Co-op CWS currently has two potato suppliers in Northern Ireland and these are: 1. Wilson’s Country Potatoes from this supplier are supplied to stores via our distribution centre at Carrickfergus. 2. Brendan Robinson Potatoes from this source are supplied direct to local stores mainly in Fivemiletown, Irvinestown, and Omagh. Price negotiations take place on a weekly basis between the account manager and the CWS buyer based in Manchester. In the case of Brendan Robinson, we can report that we have received only one application for a price change since September of 1999. Specifications for the delivery of product packed under Co-op brand are tightly controlled and monitored by the CWS Quality Assurance Manager, and this includes varieties which are deemed suitable for pre packing for ultimate fresh consumption. The list of acceptable varieties for the Northern Irish supply differs significantly from those which are offered for sale on the mainland, and is designed to reflect local preferences with the inclusion for sale of varieties such as Red Rooster, Kerrs Pink, and British Queens, which are not commonly seen on the mainland. It should be noted however that sales of these varieties are not strong and are out performed by sales of more widespread recognition. Our suppliers are committed to supplying locally produced products in line with CWS policy, assuming the product is of sufficient quality to meet the product specification. It is of course a matter of common good economic sense to source product from local sources, in order to cut down on the expense of transport. It is not CWS policy to use the term ‘packed in’ rather than the true country of origin for the produce, in any area of our trading which would include Northern Ireland. In order to comply with the CWS code of practice, CWS Packaging clearly states the origin of the produce, the name of the variety, the supplier code, display until code and a supplier traceability code. In addition to the procurement of potatoes from Northern Ireland, we have a policy of sourcing produce from a point as close to its point of consumption as is possible, taking account of all logistical, economic and technical factors involved. To this end other agricultural Produce is sourced from the following: Hughes Mushrooms Sparkipak Robipak Fyffes Clonmore Farms These include locally produced vegetables, prepared salads and vegetables and imported fruit products. In the case of Hughes Mushrooms, that supplier supplies 100% of the requirements of the Northern Irish stores and also the largest proportion of the requirements of mainland based Co-op societies. 28 October 1999 Rt Hon Nick Brown MP Dear Minister Origin Labelling I am writing to express our support and enthusiasm for your proposed guidelines on Origin Labelling received today from JFSSG. What you are espousing – the identification of origin of the product itself, not merely where it was packed, and the country of origin of major ingredients – is already the norm on Co-op Brand products. It was one of the many improvements in consumer friendly labelling introduced by the CWS when we launched our Honest Labelling Campaign in November 1997. The campaign is supported by a Code of Practice on Labelling Pre-packed products, and I enclose the appropriate pages. Section B, on Origin Labelling, details the policy we adopted then. We have since gone further. Recognising most consumers want to know where the meat in products originates, we now detail this on all meat products irrespective of the amount contained in the product. The enclosed examples demonstrate this: the information is normally to be found on the back of the label, with all the other consumer information, and normally immediately next to our name and address: Chicken in a Leek & Bacon Sauce Product of UK Lasagne Product of UK Tex-Mex Style Chilli con Carne Product of UK 4 Slices Roast Beef Product of UK Wafer Thin Smoked Ham Made using British Pork We believe our Code of Practice is an ideal starting point for industry-wide guidelines on consumer labelling. Your colleagues in the House; Tessa Jowell MP and Jeff Rooker MP, received copies at its launch and responded favourably at the time. We pointed out to them then its synergy with the consumer principles behind the Food Standards Agency. Now the Agency is about to be launched we would again commend it to you. Yours sincerely W D SHANNON INTRODUCTION The law starts from the premise that where foods are grown and processed is unimportant other than when some element of the product or its packaging might imply a particular origin which is not the case. This merely protects consumers from being overtly misled. Irrespective of overt symbols and descriptions, consumers have expectations about the origin of the foods they eat. Food and ingredients are no longer sourced and processed locally or from particular countries but, with the aid of modern technology, may be grown in a variety of different countries, transported elsewhere to be processed to an intermediary stage and only packed in the final form in the country of sale. Many consumers simply want to know where food is produced. Others wish to use this information as a basis for choice: to support local industries or avoid foods produced by regimes and practices to which they object. The starting point for the code is to require a country of origin declaration on every product. It also requires that the source of ingredients and the place of manufacture are separately identified. It provides further clarification of where place names in the name of a food can be misleading. The use of flags, symbols and other devices which are associated with a particular place of origin are limited to products which can claim a genuine association with that place. The practice of using words as a disclaimer to counteract a misleading illustration or presentation is not permitted. LEGISLATION "Particulars of the place of origin or provenance of the food (must be declared) if failure to give such particulars might mislead a purchaser to a material degree as to the true origin or provenance of the food." [The Food Labelling Regulations 1996. Regulation 5(f)] LABELLING What about place of origin? For the purpose of this requirement, the words "origin" and "provenance" should be taken as having the same meaning. Particulars of the place (not necessarily the country) or origin or provenance of the food must be given. Where is the place of origin? The true origins of a food product are the places where it was processed and from which its ingredients were obtained and includes any place where it underwent a treatment or process resulting in a substantial change. For example, slicing and packing qualifies as a substantial change. In the case of a single ingredient food which is imported and then undergoes a substantial change, to state only the country of origin, the importing country, is misleading. In such cases the labelling must state both the country of origin of the ingredient and the country where it last underwent a substantial change. Usually, the main processing operation will take place in the country of origin and the product will be prepared and packed in the country of import. The appropriate labelling is produced in X. packed in Y, for example, Dutch Edam cheese packed in the UK would be labelled product of Holland, packed in UK. Multicomponent foods will usually be made from ingredients sourced from a variety of origins. Where ingredients totalling 70% or more by weight originate from a single region, country or area this region, country or area can be stated as the country of origin. Where no specific origin can be identified, products must be labelled made in X with ingredients from more than one country, where X is the place of manufacture. Wherever it is possible to be more precise, the place of origin of individual ingredients should be identified. Where more substantial processing is undertaken in the country of import, the distinction must be made in the declaration as to which process occurred where, for example, oranges squeezed in UK from oranges grown in Israel should be described as: produce of UK, made from Israeli oranges. [Bacon cured in Denmark but sliced and packed in UK would be described as: produce of Denmark, packed in UK.] Where the origin of products can vary, for example, from season to season, or where imports from more than one country are blended this should be reflected in the country of origin declaration, eg product of more than one country. This must always be narrowed to the smallest possible geographic area, eg produce of EU or product of SE Asia. Such declarations must only be used where records show that there is blending or variation of the source of the product over a period of 12 months. Where on the label and what size should the origin declaration be? Usually the declaration can be included anywhere on the pack provided it is in a clear and legible format. Where the name of a food includes a place name, this may mislead the consumer as to the origin of the product. Some place names used in the name of the food are the place where the food was made, eg Dutch gouda or Scottish salmon. Others may refer to a particular type of product where the customary name incorporates a place name but the product is not/no longer produced exclusively there, eg Cornish pastie or Eccles cake. It is never clear cut with names like these, especially with those products which may be associated with a certain quality/premium product, eg Cornish ice cream or Devon toffee, whether the consumer interprets the place as the place of origin or a reference to a particular quality. Where the name of a food or its brand or trade name refers to a place other than where the food is made, the place of origin must be made absolutely clear. Appendix B COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT 03 February 2000 I am replying to your letter of 28 January addressed to Mr Eddie Kane. Regrettably, due to previous commitments it is not possible to have our suitable company representative at the meeting planned for 10.45 on Friday 11 February. Dunnes Stores position in respect of potatoes is that we source all our potatoes sold in our Northern Ireland Stores from Wilsons Potatoes and Vitafresh, Newry. Dunnes Stores has always had a policy in respect of its Northern Ireland Stores of supporting locally sourced products and this position is well understood by our numerous suppliers particularly those suppliers backing into the Agri-business sector such as Moy Park, O’Kane poultry, Dungannon Meats and Wilson Potatoes. In recent times we have been conscious that this position has not always been fully appreciated by our customers so we have embarked on a series of advertising activities and in store theme promotions to highlight, for the benefit of our customers, products and produce which is sourced from Northern Ireland Food Processors. Yours sincerely GERRY McLORNAN Appendix C COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT 18th January 2000 I am writing to confirm our telephone conversation of 11th January that I will appear before the Committee with Mr Angus Wilson from Wilson’s Country Fresh, our potato supplier, at your convenience. We would be pleased to explain our approach to the retailing of potatoes in more detail to the Committee. We thought it might be helpful to make a few comments in advance to describe more generally the way in which Marks & Spencer has developed the food business over a period of many years. Marks & Spencer has a well established record of giving support to the communities in which we trade and this includes, where possible, local sourcing. In this regard we buy a significant proportion of the fresh potatoes sold in our Northern Irish stores from Northern Irish growers. We have been buying our potatoes since 1994 from Wilson’s Country Fresh with whom we are developing a long term relationship, a key element in the success of our food business. The success of this relationship to date has allowed us to dramatically increase the tonnage of potatoes that we buy in Northern Ireland. Marks & Spencer’s objective is to set leading standards in food retailing and we do not look to sell large volumes of cheap potatoes. To this end we buy particular potato varieties that customers tell us are the best, and we are constantly looking to procure the cream of the crop in these varieties. Whilst we are not trading a commodity product but a speciality vegetable, the prices we pay will be affected by the volatility of the international potato market, an issue which we and our suppliers must manage. Our customers demand quality and value. Retail prices must reflect supply costs but may also be constrained by what the customers are willing to pay. With regard to crisping, Marks & Spencer is not involved in producing crisps or sourcing crisping potatoes from Northern Ireland and therefore we cannot comment on any possible impact on local producers. We hope that we shall be able to help the Committee to clarify some of the issues relating to potatoes. With regard to the more general question of farmers’ debt, the terms of reference of the current inquiry are wide ranging. We have insufficient experience of these matters in Northern Ireland for us to make any meaningful contribution and regret that we cannot be of further assistance to the Committee. Yours sincerely
D A GIBSON Appendix D COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT 7 February 2000 I am writing in response to your letter of 28th January 2000 requesting a memorandum on Marks & Spencer’s policy towards and relationships with primary producers in Northern Ireland. 1. Marks & Spencer is proud of its long-term relationship with Northern Ireland. The first Marks & Spencer store in Northern Ireland opened in Belfast thirty-three years ago. Our retail operation is now very significant with seven stores and a major distribution depot, which currently employ over 1600 people. We have invested £65m in this operation over the last five years. 2. Marks and Spencer also has a significant food supply base operation in Northern Ireland, for more than forty years we have been partners with your important agri-food sector. However, our contacts with your business community go beyond stores and suppliers. Through Business in the Community Marks & Spencer people gladly supply expertise to small food enterprises. We are pleased to be on the Queens University Advisory Board and to support the agricultural industry with a major exhibit at the Royal Ulster Agricultural Society Annual Show each May. 3. The success of Marks & Spencer’s food business is based on our range of high quality and highly innovative products produced by the best suppliers, that differentiate us from the high volume supermarkets. Our policy of developing collaborative supplier relationships and the excellent quality of Northern Ireland products has led to a highly successful partnership with strong sales and volume growth. 4. As I highlighted to you in my letter of 18th of January we have been buying potatoes in Northern Ireland from Wilson’s Country Fresh since 1994. These potatoes are being sold in our stores in Northern Ireland and Eire and this year we will also be selling some across the rest of Europe. Wilson’s Country Fresh’s business is growing dramatically in tonnage and value terms with Marks & Spencer. 5. Avondale Food Ltd is an important supplier to several departments in our food business. Avondale’s business with Marks and Spencer is growing dramatically, 50% of their business is now sold in the rest of Europe, and they have several new lines which are soon to be launched which will continue their strong growth. 6. An important supplier to our dairy business is Dromona Quality Foods, they now supply 60% of all the butter sold by Marks & Spencer in Europe. Similarly, all of the milk Marks & Spencer sell in Northern Ireland is produced in Northern Ireland. 7. We have a substantial business with O’Kanes who have supplied us with poultry for over thirty years. The extremely high standards of innovation at O’Kanes has been critical in achieving our pre-eminence in the chilled poultry business. We currently buy some 4 million chickens and 30,000 turkeys from O’Kanes each year. O’Kanes have become the largest importer of lemons into Northern Ireland and the Marks & Spencer Lemon Chicken is one of our star lines across Europe. 8. In the meat industry we have a similarly strong story. 10% of all Northern Irish steer carcasses are supplied into the Marks & Spencer food business. 9. Our policy in Marks and Spencer is to source the best quality and value foods from our suppliers. We are not a supermarket, but rather a food retailer who offers a range of innovative, high quality products which represent good value for money. Our approach is to work closely with a supplier to jointly develop a product, an approach that leads to close working partnerships. Our suppliers are paid promptly, assisting their business’ cash flow. 10. The continuing success of our retail operation and supplier partnerships in Northern Ireland is based on our ability to work with the best suppliers to create highly innovative and differential products. We have every confidence that after over three decades of business in Northern Ireland Marks and Spencer and its suppliers have a strong future in both Northern Ireland and across our European business. Yours sincerely D. Gibson |