PROCEEDINGS OF THE COMMITTEE
RELATING TO THE REPORT

(Continued)

Appendix N

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
INQUIRY INTO DEBT IN THE AGRICULTURE INDUSTRY
WRITTEN SUBMISSION BY: NORTHERN IRELAND GRAIN TRADE ASSOCIATION

June 2000

Views on integration/re-organisation of the agricultural industry

The integration and partnerships within the Poultry sector have addressed the issue of minimising cost. We would recognise that integration and/or partnerships can help sustain businesses through the difficult times.

A facilitator with a ‘can do’ philosophy within the Government and Department of Agriculture and Rural Development could play a leading role in bringing food industry players together for the common good.

Financial support should be sought to encourage integration.

What Government and Farmers can do to make the industry more competitive

Northern Ireland faces, currency, geographical and input cost disadvantages.

While losing money, the Poultry sector has faced these problems without stopping their technical advance and product innovation.

(A) The single biggest issue facing the industry is currency strength with particular reference to Northern Ireland, because of the land border with the Republic of Ireland. Mechanisms already exist within an EC context (monetary compensation) and where mechanisms do not exist they could be sought by government eg the Republic of Ireland’s scheme in 1983 which was geared towards exporting companies.

(B) The Government should appoint a facilitator with appropriate resources to seek out opportunities and bring them to the support of the farming industry. The specialist knowledge held within DARD should be utilised as a positive force rather than the negative force that we have seen in the past. Opportunities for co-operation with other member States will occur and a facilitator working closely with the agricultural industry should be tasked to find a way through the difficulties that will also arise.

The agricultural industry needs to know that they have access to a positive thinking office within DARD. The most recent example of what might have been achieved by this approach is demonstrated by the £1m debt plan to assist the pig producers in the ROI, who were affected by the Lovell and Christmas fire.

(C) The farming sector and all manufacturing industries within Northern Ireland suffer from the high cost of electricity.

We would propose that Northern Ireland should be made a special case when applying the Climate Change Levy. The level set for Northern Ireland should be reduced to reflect the premium already being paid in Northern Ireland.

(D) The haulage and fuel industry is being decimated by the difference in fuel prices across our land border and this is having a major knock-on effect to the agricultural industry.

We would propose that Northern Ireland should seek a dispensation on diesel and road tax, for use in Northern Ireland, to allow prices to equate to ROI prices.

(E) The intensive sector in Northern Ireland face input costs of between 5% and 10% higher than GB, they face input costs of between 15% and 20% higher than the USA.

The grain regime in the EU has an intervention base price that keeps the price of grain high to support grain farmers and the EU uses restitutions to allow the export of that grain at World prices. The result is that the livestock industry pays an inflated price for its raw material and gets no assistance on exports or protection on competing imports.

In the USA the grain farmer gets world price plus a guarantee up to a minimum price. The livestock industry, get grain at world price cheapening their produce and assisting their export potential.

The Government should seek to match this system allowing the livestock producers an even playing field in a bid to export value added product.

Failure to match the American system will result in the collapse of our intensive sectors in the longer term.

(F) A long term Government Loan Scheme which would offer low interest rates and an opportunity for farmers to re-structure their business should be considered.

(G) The other issue which would make a difference would be the effective labelling of food products as having been produced in the UK (primary production). Existing proposals have been watered down due primarily to supermarket pressure. The Food Standards Agency should help educate the consumer regarding countries where products are sourced and the production methods in those areas.

The quality of produce being produced is it competitive?

Quality produce is being sold to the buyer and is therefore competitive, however the producer may be making a loss to achieve the sale.

Poultry imports are achievable at a significant discount over home produced products, and may not have been produced to the same standards as this country.

Many factors mitigate against a GB producer and additional costs burden a NI producer. Some of the added costs are Government imposed, the Government should pay compensation when they exceed EU standards.

Across a range of parameters from welfare standards (pig industry) to bacteriological status of product (poultry) to meat quality (beef and BSE status) the produce of the province is of an extremely high standard. NI cannot compete with commodity prices, only niche markets are sustainable for home-grown produce.

Where the processor fits into the price gap from the farm gate to the consumer

While the food retail index has followed inflation over the last decade, farm incomes and processor incomes have seen a major decline.

The evidence suggests that processors are losing money or not making an acceptable return. This is demonstrated by losses within the major processors in Northern Ireland and the knowledge that major PLC processors such as Glanbia, Kerry, Malton would welcome discussion with any concern interested in stepping into processing.

The contribution Co-operatives can make to the industry

Partnerships and integration within businesses can offer efficiency, however co-operatives agenda does not always equal efficiency.

Appendix O

COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
INQUIRY INTO DEBT IN THE AGRICULTURE INDUSTRY
WRITTEN SUBMISSION BY: WILSON’S COUNTRY LTD

23 February 2000

Please find below information required by the Committee following the proceedings on Friday, 11th February 2000.

NOTES:

1. Product from ROI is used to introduce the early new set-skin season and bridge the gap between the local old season and new season.

2. Maris Piper is difficult to grow in NI due to common scab and slug susceptibility, yet it is recognised by consumers as a premium tasting potato.

3. Cyprus potatoes are offered to consumers as a new potato before our local new potatoes are in season.

4. 5% GB product is imported to supplement our local crop.

5. As a company, we are actively involved in working with growers to develop local growing of Maris Piper and extending our local season, hence the increase in NI % for this season.

Regards.

Angus Wilson

Managing Director

List of Other Relevant Papers

List of Other Relevant Papers

Ulster Farmers’ Union – Paper on issues to be addressed in the local agri-food supply chain

Assembly Research and Library Services – Paper on Farmgate and Retail Prices

Competition Commission’s Supermarkets Inquiry - Issues Statement

ULSTER FARMERS’ UNION
ISSUES TO BE ADDRESSED IN THE LOCAL AGRI-FOOD SUPPLY CHAIN

The Ulster Farmers’ Union would highlight the following key issues which farmers feel need to be addressed in the local agri-food supply chain

• Transparency

Farmers are greatly concerned at the huge mark up between farmgate and retail prices for many commodities. For example top grade beef cattle are valued at c. 174p/Kg. In the supermarket sirloin steak retails at c. £11.80/Kg. Pig producers receive about c. 68p/Kg for their pigs. Pork fillet retails at c. £8.00/Kg. More transparency is needed in the Agri-food chain to ensure fair pricing structures are in place.

• Labelling

Proper labelling of Northern Ireland produce is crucial. The retail sector has not properly addressed this issue. Primary produce can be imported to NI, processed and labelled as "sourced in Northern Ireland". The local pig industry has suffered particularly severely with exceptionally high welfare standards not being promoted. What plans have retailers to clarify labelling procedures?

• Commitment

The current strength of sterling has seen more and more produce imported to Northern Ireland. Are retailers committed to Northern Ireland suppliers and the quality they can provide, or is price the key factor? Can they confirm that the quality and welfare standards of imported product matches local produce?

• Cost

Costs of production for farmers in Northern Ireland are extremely high. Compliance to a whole range of quality assurance schemes has heaped extra cost on producers with little marketing advantage apparent and certainly no premium. Currently a farmer in Northern Ireland could spend over £600.00 registering with Quality Assurance Schemes. What future co-ordination can be introduced to maximise the benefit of these schemes and minimise the administration/cost/auditing involved?

• Supply chain management

Trust and confidence is at a very low ebb among producers in many commodities. What plans have retailers to instigate proper supply chain management and build up a more positive relationship with the primary producer?

• Regional Policy

We believe decisions taken by central policy makers, based in GB, do not always reflect the situation "on the ground" in Northern Ireland. We believe the major supermarket multiples should adopt a regional policy to better reflect market conditions in the Province.

• Promotions

We are very concerned that the cost of ad hoc promotions, particularly for fresh produce, appears to be passed back to the producer. We feel this is an unacceptable situation. Local farmers have invested heavily to meet the high standards demanded by the major multiples. Margins are now being squeezed to unsustainable levels and the impact of promotions exacerbates the problem.

ASSEMBLY RESEARCH AND LIBRARY SERVICES
FARMGATE AND RETAIL PRICES

11 January 2000

Martin Wilson

Clerk of Agriculture & Rural Development Committee

Re: Farmgate and Retail Prices

The attached tables (from an August 1999 House of Commons Research Paper) compare changes in agricultural producer prices between 1995 and 1998 with changes in retail prices over the same period. Both tables are in index form (with 1995, as the base year, set at 100).

While it is difficult to match the different items in the tables exactly, it is clear from the data that farmgate prices in the UK have fallen significantly while retail prices have generally increased. In the one area where there was a major fall in retail prices — unprocessed potatoes (-27%) — there is notably a much larger fall in the corresponding producer price - root crops (-39%). It seems that the fall in prices paid to farmers is not reflected by the prices that consumers pay in the shops.

Producer prices for Northern Ireland (see attached Table 2.8)have suffered an even greater overall fall — 27% between 1995 and 1998 compared with a 22% fall in UK producer prices over the period. As UK retail prices also apply to Northern Ireland this would suggests that the disparity between farmgate and retail prices is greater in Northern Ireland.

I hope this is helpful. Please let me know if you require any further information.

RESEARCH PAPER 99/77

Producer prices have in most cases fallen since 1995;

Index of Producer Prices of Agricultural Products (UK)
(API) 1995=100